Friday, 16 March 2018: 10:10 AM
Personal bankruptcy describes the situation of individuals who are no longer able to repay their debts. The problematic situation of individuals can be solved as a debt relief which enables individuals to start their life again without a debt burden. In our research the impact of the annual percentage rate of charge (APRC) on the behavior of the indebted people was investigated. Some of the analyses included people in the so-called repeated "bankruptcy" that have been dealing with personal bankruptcy repeatedly. The sample of 148 debtors with approved debt release over the past three years were investigated for the entire period since the insolvency petition until the court's decision on debt release. The investigation was divided into three main areas: the reasons for the bankruptcy of the debtor, the level of actual satisfaction of creditors in relation to the expected satisfaction rate at the time of submission of the petition for authorization of debt relief, reasons for failing to meet the specified process parameters. A key area of research has been to investigate the dependence of borrowers on the level of debt before the opening of insolvency proceedings. The research was preceded by a pilot study that led to the hypothesis of the existence of a constant value of the APRC and led to further conclusions in the form of the hypotheses tested. The research was subsequently extended to 843 creditors. As a data source, a publicly available insolvency register was used, along with information from documents sent by the creditors in their claim applications in individual insolvency proceedings. After investigating debtor solvency dependence prior to insolvency proposal filling we found that the amount of high-rate loans is increasing over time. Credit agreements with the highest APRC are being closed shortly before the insolvency proposal.
The paper is one of the outputs of the research project “Insolvency of individuals in the Czech Republic - economic and non-economic social impacts” registered at Internal FPH Grant Agency of University of Economics, Prague under the registration No. IG309037.