Slovak government created a network of 46 Free Debt Advisory sites in 2021/2022 with more than 180 employees providing financial, legal, and psychological counselling to overindebted people. Over 4,000 individuals are registered so far as the clients, and over 1,000 cases were already successfully closed.
The Slovak debt counselling is organised as a holistic approach which is possible by the synergetic cooperation of economists, lawyers, and psychologists in each office. They offer
- economic counselling (e.g.: household budget, proposal for income & expenditure enhancement, assessment of risky financial behaviour),
- legal counselling (e.g.: analyse contracts, recommend legal strategy against the debt, analyse potential for statutory insolvency),
- psychological counselling which asses the debt impact to personality and behaviour of the client and tries to strengthen motivation and resilience of the client.
Free debt advisory in Slovakia was established to avoid personal bankruptcies whenever possible. Personal bankruptcy is available to people with multiple overdue debts, facing at least one execution for more than one year. All applicants must contact The Centre for Legal Aid and pay the fee (can be covered by the loan from the Centre). There are two types of personal insolvencies: (1) the bankruptcy, and (2) instalment plan. Strong majority of applicants prefer the bankruptcy. Instalments are generally allowing to repay the debt in 5 years. Immediately after the court decides on bankruptcy, the debt of the applicant disappears (with no probation period) but some categories of debt are not impacted by the bankruptcy. The honest intention of the applicant is always assessed by the court. The dwelling is protected up to the value of 10,000 euros. Strong majority of cases are finished without any payment to creditors. The free Debt Advisory sites have established an intensive cooperation with the Centres for Legal Aid as the organization through which all the applicants shall apply. The Centres recommend to their clients to avoid personal bankruptcy if possible and re-route them to the free debt advisory offices.
Other big groups of our clients are those (1) who face payroll deduction by executor, therefore they avoid any official labour contract, (2) who signed the doubtful loan contract and need the protection as a financial consumer, (3) who are chased by collections agencies and/or banks, (4) who are released from the prison and intent to start their new live, (4) who became a victim of the crime related to debt, and (5) young adults leaving children‘ foster homes. Having the clients from these groups, the free debt advisory project cooperates with the Slovak Chamber of Executors, National Bank of Slovakia, the Slovak Banking Association, the Association of Slovak Collection Agencies, the Association of Financial Agents and Advisers, the Prison and Court Guard Service, the Support Offices for the Crime Victims, etc.