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May 18, 2021

President promulgates personal bankruptcy law

President Klaus Iohannis signed the decree on the promulgation of the Law regulating the procedure of insolvency in the case of individual persons, on Thursday. According to a Presidential Administration release, the decree on the law on personal bankruptcy was signed on Thursday.

On 20 May, the Law on the insolvency of individual persons was adopted by the Chamber of Deputies without anyone opposing. The day before it had obtained the favourable opinion of the Legal Committee.

The draft law was initiated by PSD MP Ana Birchall. In summary, the law says that a debtor who is unable to repay his/her debts can be ‘helped’ with a reimbursement plan over 5 years, supervised by an insolvency commission that will most likely be made up of representatives of certain authorities such as ANPC or BNR, according to Ana Birchall.

The main advantage of the new law is that, when the insolvency procedure opens, all foreclosure procedure is suspended and no new ones may be initiated.

The Romanian Bankers Association estimated at the end of March an impact of the individuals’ insolvency law of approximately 3.5 bn lei. BNR Governor Mugur Isarescu in turn said the measure would help clients in their negotiations with the banks, but warned that it would need to be ‘a good law’.

In February, the head of the Representation of the European Commission in Romania, Angela Filote, commended the law on personal bankruptcy.


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