In late July, the Parliament of Montenegro for the first time adopted the Law on Personal Bankruptcy of Consumers, which stipulates that citizens have the possibility to return their debts to banks, leasing companies, utility companies, power companies within a certain period of time, by declaring bankruptcy.
This Law, which entered into force on August 22nd, will create real preconditions for harmonization of legislation with the EU, and Montenegro will be among the countries that have so far adopted similar legislation and which have developed economies. Such law exists in Slovenia and Croatia, but their economists argue that there is little interest of indebted citizens for the institution of bankruptcy.
Specialist of the European legislation, however, say that personal bankruptcy in the world is a phenomenon which is not at all pleasant for the citizens. A citizen who declares bankruptcy in exchange for writing off or mitigating debts, gives a lot of his/her basic human rights to the the state and creditors. Starting with the right to privacy, the right to property, the right to work and free choice of employment, because others would decide on these issues, and not the indebted citizen. Thus, for example, citizens in bankruptcy get a supervisor without whose consent they cannot spend not even a cent.
The lack of this Law is that the bankruptcy is also registered in the credit register of borrowers from 7 to 10 years, and this will make it difficult for the debtor to obtain a mortgage or a loan for a longer period. In addition, due to the recorded history of bankruptcy, a debtor may be difficult to find employment or to lease a house or an apartment.
The lawyers also fear that the Institute of Personal Bankruptcy might become a cover to protect the interests of creditors, to the detriment of citizens. In addition, abuse of personal bankruptcy is also possible (moral hazard), in order to achieve complete liberation of debts.
However, the application of the Law on Personal Bankruptcy of Consumers has yet to begin this autumn.
It is interesting that in the US, where citizens have no problem admitting that they were not good at handling their money, in the last two years two million people declared bankruptcy.
The original text of the Law can be found HERE