In the realm of legal matters in the Republic of North Macedonia, the concept of "bankruptcy for individuals" that exists in Western countries is completely unknown. Here, a person burdened with debt could find themselves perpetually trapped, facing an ever-growing debt that seems impossible to escape.
However, a ray of hope has emerged with recent amendments to several legal provisions, adopted on 20.07.2023. These changes not only shorten certain limitations in favor of the debtor but also introduce a groundbreaking provision that can pave the way to debt relief.
Under the new amendments, the statute of limitations on a court decision or settlement ends when a request for enforcement is submitted to a competent executor. Once the enforcement procedure begins, there's a ten-year window to address the debt. This is a significant development as such a statute of limitations did not exist before, and now, it offers a chance for individuals to break free from their debts after a specific period.
Furthermore, the changes made to the Law on Obligation Relations bring more good news. In cases where inflation remains below 50% annually, the interest on a debt cannot exceed the principal amount. This measure is designed to curb excessive interest rates and ensure that debts are more manageable for borrowers.
In conjunction with the amendments to the Law on Financial Companies, the government is sending a clear message: the burden of high consumer loans must be regulated and controlled. To achieve this, the law now limits the total costs that can arise from consumer credit agreements. Financial companies are prohibited from including fees that are not factored into the annual rate of total costs. This measure ensures that fees don't exceed 60% of the approved loan amount, offering relief to borrowers who were once at the mercy of exploitative financial practices.
These progressive changes demonstrate the government's commitment to protecting citizens from over-indebtedness and promoting financial stability. By organizing and stabilizing citizens' liquidity, we can expect a positive ripple effect throughout the economy, including a potential reduction in the gray economy.
The new legal landscape brings a glimmer of hope for individuals facing crushing debt, and it's a step towards creating a fairer and more transparent financial system for everyone in the country.
By Martin Boskoski, Founding Partner, Lalicic & Boskoski Law Office