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A chance to go bankrupt

It might sound strange, but in Lithuania a natural person is still unable to go bankrupt, even though such a possibility is functioning nearly in all European Union countries. However, after long discussions the Government has suggested the law of Bankruptcy of natural persons to the Parliament. If the majority of Parliament members will approve it, Lithuanians will be able to go bankrupt from the beginning of 2012.

The law made its debut in the spring of 2009, but then it was strongly criticized and dismissed. The corrections have been made and the law is under consideration once again. However, critics claim that the law is still unfair; the banks are dissatisfied with it the most.

For over two years Lithuania’s banks have stood their ground on all bankruptcy topics. Darius Sauliūnas from the law firm “Euroteisės biuras” says that: “the banks have not become ‘socially responsible’, they are more comfortable with the law of the jungle in the business.” Although the banks themselves are giving loans to the businessmen who want to implement their ideas, if something goes wrong the whole responsibility is on the shoulders of the indebted.

The new project for the Bankruptcy of natural persons law says that the administration expenses cannot exceed 15% of the pawn property value. The banks believe that it is too generous, they wish that it would be less than 3%. If the law would be implemented a natural person could go bankrupt if his debt would surpass 20 thousand litas. The banks wish that the sum would be at least 50 thousand litas.

Some experts believe that the possibility of bankruptcy will be beneficial only to the rich Lithuanians. Vilnius bailiff Irmantas Gaidelis says that using the Bankruptcy law will pay of only if the debt exceeds 1 million litas, because the administrative cost over the 5 year legal process can reach 100 thousand litas.

The Parliament hopes to agree on the law till the summer of this year.

EBN Reporter Edgaras Savickas