Many travel to England because the bankruptcy procedure there is friendlier, allowing people to pay all debts within one year. It is possible that all Europe’s people with financial problems will come to Latvia instead.

If the currently Saeima reviewed changes to the Insolvency law are approved, Latvia will have the most liberal insolvency process for private persons, reports Latvian Radio.

2 500 people in Latvia are currently engaged in insolvency proceedings, some of them are also residents of Lithuania and other European countries who chose to go bankrupt and settle all debt obligations in Latvia. While, in the past, people praised England for its liberal laws regarding insolvency procedures. This situation could change in the near future if the Saeima accepts the currently discussed amendments (to carry out insolvency processes within a year’s time). It could become the friendliest insolvency law in Europe, as concluded by the Latvian Commercial banks Association.

According to the survey of the association, the insolvency process across the whole of Europe lasts for four years on average. There are also countries with a seven-year long period. The neighbouring Estonia’s insolvency procedure lasts for up to two years, during which property is simply sold. After that, there is another three or seven year period (depends of the size of the debt), during which payments are made to creditors. Lithuania’s insolvency period lasts from five to six years. Finland offers an opportunity to perform a personal approach, allowing the person to perform payments to creditors following a specific schedule, based on the person’s ability to pay without selling his or her property. The Netherlands’ insolvency process involves selling the entire property, but this does no help with debts – it is expected to be paid in full. Slovakia’s relieved bankruptcy procedure is simple and faster than the traditional one, but the amount of the debt must not exceed 165 thousand EUR.

In England, people are prohibited from taking managing and state positions after going through a fast and simple bankruptcy procedure. The Commercial Banks Association believes that Latvia should introduce a similar practice.

Ilmars Krums, a member of the Council of the Association of insolvency administrators, warns that the version currently discussed by the Saeima could turn Latvia into an area of bankrupt tourism. Insolvency process administrators believe the current law is the best compromise for all sides. However, the majority of the Saeima – two opposition and two ruling parties- support the relief of the insolvency process for private persons.

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