Romania, just like Hungary and Spain, offers bank customers no viable solutions to have their debts restructured via legally monitored bankruptcy proceedings, a London Economics’ study on banking consumer protection stated.
The survey was commissioned in 2011 and completed last year. After its completion, the Spanish authorities have implemented a series of measures to protect bank debtors from being evicted from their homes if they are not able to pay their mortgage rates in time.
Moreover, the International Monetary Fund has been pushing for a personal bankruptcy law in Hungary.
In Romania, however, the lawmakers have twice rejected personal bankruptcy regulations, citing reasons such as lenders’ concern about the banking system not being able to withstand possible losses or that the high level of criminality could lead to more attempts to defraud banks than in other countries.
The government was also not supportive of a personal bankruptcy law, with the main reason being the opposition of the IMF, the study showed.
Although the IMF denied such a position, Romania’s 2012 reports on its loan agreement with the IMF present “interesting evidence,” London Economics said.
In its April 2012 letter of intent to the IMF agreement, the Romanian government stated that no “legislative initiatives, such as the current draft of the personal insolvency law or proposals for the debt collecting law” would be introduced without prior consultations with the IMF and the European Commission.
Such measures could undermine debtor discipline, the government said.
Moreover, both the central bank and Romania’s banking association were against the introduction of a personal bankruptcy law, citing the general fragility of the local system.
However, despite not having a regulated debt discharge progress, Romania has taken some steps to aid consumers, particularly by revising regulation applying to lenders granting loans to individuals, which focus on attempting to ensure that over-indebtedness does not occur, the survey showed.
The regulation stipulates tighter rules for banks when setting the maximum amount that the consumer can borrow, in an effort to prevent the consumer reaching the point of over-indebtedness.