Part of the new insolvency framework, ‘Personal repayment schemes and debt relief order’, which enables up to €25,000 in debt relief in some cases, has come into effect.
According to the insolvency service, people who are left with only €200 a month after expenses – calculated at €733.60 per person – have a vehicle worth up to €4,000, personal assets of up to €1,000, and professional equipment up to €6,000, are eligible to apply.
The calculated value of monthly expenses increases with each dependant.
The conditions are expected to apply to some 20,000 people another 10,000 who are bankrupt.
Up to €25,000 can be erased from bank debts and €2,500 from debts owed to the government and local authorities.
An example would be a person with a monthly income after tax of €900, a car worth €3,500 and personal assets of not more that €1,000, if he owed up to €25,000 could have his debt cleared and his guarantor would also be off the hook. For those with a loan of say €50,000 who meets the income criteria, their debt would be halved.
Two applications have already been submitted to the insolvency service according to its head George Katorsakis, while the move will benefit people, the banks and the state, he said.
People will have a chance to get back on their feet, banks will relieve themselves of legal duties and the state will no longer need to take people to court for debt they cannot pay, he added.
Thirty insolvency practitioners will help people fill in applications for debt relief orders, Karotsakis said.
For more information visit http://www.mcit.gov.cy/mcit/drcor/drcor.nsf/index_gr/index_gr?OpenDocument