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Citizens Can Start Applying for Debt Write-off

Ljubljana, 3 August - The poorest citizens are able to apply as of Monday for debt write-off as part of a scheme adopted by the government and passed in parliament in July. Applications need to be sent to creditors by the end of October, while agreements on write-off need to be concluded by the end of January 2016.

Applications for debt wrote-off for the poorest accepted as of today.
Photo: Domen Grögl/STA

The biggest interest on the first day was recorded in Maribor, Slovenia's second city, which has seen a string of bankruptcies in recent years. More than a hundred people turned out there to get information and forms for debt write-off.

"Most of those turning out said they owed money to courts, Telekom Slovenije, utilities, Financial Administration and banks," Maribor Deputy Mayor Jelka Černivec said. They accepted 17 applications for the write-off of debt from unpaid school meals, kindergarten and utility bills.

Meanwhile, some companies and municipalities joining the scheme recorded no interest, but they yet expect to receive applications. The Ministry of Labour, Family and Social Affairs got 120 calls with queries today.

The law granting debt relief for the poor, passed in parliament just over two weeks ago, created a legal basis for agreements between debtors and creditors such as utilities, insurers, banks and the revenue service.

A few days after the legislation was enacted in parliament, representatives of the state, municipalities, public utilities and banks signed an agreement pledging to cooperate in the debt relief effort.

Only debt incurred before 2014 will be eligible for write-off, while the window for signing relief agreements is six months, according to the Ministry of Labour.

A total of 74 creditors have joined the project of debt forgiveness so far, including 38 municipalities, among them Ljubljana and Maribor, two banks, and a number of public utilities and insurance companies, the ministry said.

Applications are available on a special on-line portal as well as at social work centres and the offices of the Slovenian Red Cross and Caritas and the Association of Friends of Youth of Slovenia.

Debtors who received welfare payments for the poorest in the first half of this year qualify for the debt relief, while people who have declared personal bankruptcy are not eligible. About 100,000 will be eligible for the scheme, according to the ministry.

While companies typically have to pay tax bills on write-offs, under the debt write-off law the tax liability will be waived. Individuals meanwhile do not need to pay personal income tax related to the write-off.

Municipalities are expected to write-off debt related to bills for kindergartens and meals in primary schools, while banks are expected to write-off debt related to various financial transactions.

The Financial Administration (FURS) will be allowed to write off amounts of up to 50 euros, mainly income tax and administrative and court fees, but the total amount of relief provided by the state is capped at a million euros.

For this reason one of the criteria for the write-off will be the order in which applications were filed, according to the ministry. Companies that signed the agreement will meanwhile determine the amount they will write off on their own.

The bill is a part of a mini relief package for the poor that also includes forthcoming legislation to exempt most welfare payments from debt recovery proceedings.

© STA, 2015