Bankruptcy of Individuals in the Czech Republic

It is possible to undergo a personal bankruptcy in the Czech Republic since 2008. The number of personal bankruptcies has been steadily rising in the country since the arrival of economic crisis in 2009. Because of that it is necessary to examine individuals who had undergone personal bankruptcy and by whom has been the process of personal bankruptcy already completed. Personal bankruptcy debt relief is a legal process, thanks to which especially individuals are being given the opportunity to resolve their complicated financial situation. These individuals have debts toward multiple creditors are not able to repay all of it. The legal process in the Czech Republic enables to solve the insolvency of an individual via declaration of the personal bankruptcy. Essential conditions to be able to declare personal bankruptcy are to have more than one creditor and to be able to repay at least 30% of the debt, meaning 30% of the overall amount of debts toward signed creditors. In case the personal bankruptcy is resolved through a repayment plan, the maximum amount of instalments is 60. In the time period of 60 months at most lives the debtor on the level of the living wage in the Czech Republic. The amount of income that exceeds this living wage is used to repay the debts. Submitted research concerns debt relief of individuals who applies for personal bankruptcy in the time period between 1.1.2008 and 31.12.2011 and whose process of personal bankruptcy has been declared as successfully completed until the first quarter of 2015. Until the end of the research this applies for 1.352 individuals. The main aim of the research was to find out the percentage of debt repaid to creditors by each individual with regard to their age. The research has been focused on dividing the sample of 1.352 individuals to different categories according to their age, source of their income and amount of their income. Particular debtors who applied for a personal bankruptcy, has been divided into four age groups. Each individual was afterwards analysed for the source of their income, from which the debts were repaid. Possible sources of income were divided into eleven groups. The researched sample of individuals was consequently divided according to the overall amount of their debt into five categories. The largest portion of debtors in the Czech Republic is in the age categories 30 44 years and 45 - 54 years. The main source of the most of debtors is from their job position. The second largest income group are debtors with combination of income from their job position and partial disability pension. The largest amount of debtors is in the income groups of net earnings 15.000 CZK 19.999 CZK. From the 1 352 analysed debtors have repaid 100% of their debt exactly 711 debtors. The second largest group consists of 206 debtors who were able to repay during the process of the debt relief between 35 49,99 % of the debt. Personal bankruptcy is an opportunity to pull through for an individual in the Czech Republic who is heavily indebted. It is because of the fact that if the debtor will fulfil the repayment plan and will live on the level of the living wage for the period of 60 months at most, they are able to be relieved from the rest of their debt and therefore resolve their complicated situation. In case the debtor does not declare personal bankruptcy they are facing the risk of distrainment of their assets. By distrainment no debts are relieved and the debtor has to repay all of their debt.