Proposed changes related to loans repayments
The Senate of the Czech Republic approved on 16 April 2020 two acts on loans (including consumer loans) repayment measures in connection with the ongoing COVID-19 pandemic proposed by the Czech Government.
Both acts react on the current loss of income of natural persons as well as legal entities which may result in a massive increase of unpaid consumer and business loans resulting in potential insolvency or enforcement proceedings.
Based on the draft act on some loans repayment measures in connection with the pandemic, a protective period will be established lasting until 31 October 2020 or a shortened protective period lasting until 31 July 2020. The debtor will be able to notify the creditor of the use of the protective period due to the economic impact of COVID-19 pandemic. The payments of debts from the loan agreement will be postponed by the length of the protective period with the simultaneous extension of the duration of the loan security. The effects of the debtor's notification will not be subject to approval or assessment of the creditor.
The creditor will be entitled to interests during the protective period; in case of:
The draft act was passed by the Senate of the Czech Republic and signed by the president of the Czech Republic. On 17 April 2020, the adopted act has been announced in the Collection of Laws under the number 177/2020 Coll. The adopted act becomes effective as of the date of its announcement it the Collection of Laws.
The amendment to the Act no. 257/2016 Coll., on consumer credit, as amended, extends the limitation of the agreed sanction resulting from the delay in repayment of consumer loan (applicable also to deferred payment, pecuniary loan, credit or similar financial service) to the independent contractors whose repayments are more than 90 days delayed.
contractual penalty whose amount in the event of a delay of more than 90 days must not exceed 0,1% per day of the outstanding amount and the overall total of contractual penalties must not exceed half of the total amount of the principal.
The proposed changes will also apply to existing obligations provided that the delay occurred after the amendment has entered into force.
The draft act was passed by the Senate of the Czech Republic and signed by the president of the Czech Republic. On 24 April 2020, the adopted act has been announced in the Collection of Laws under the number 186/2020 Coll. The adopted act becomes effective as of the date of its announcement it the Collection of Laws.