The Amendment is extensive, so in this article we do not seek to comment on it in its entirety, but only draw attention to certain aspects that we believe will have the most significant impact on the position of our clients, which include creditors as well as obligors or, for example, employers making deductions from wages. In addition to the Enforcement Code, the Amendment also amends other laws, primarily the Civil Procedure Code.
Termination of fruitless enforcements – enforcement “amnesty”
The Amendment introduces the institute of compulsory termination of enforcement proceedings, in a number of places in several different situations:
Neither of the above-mentioned reasons for the termination of enforcement applies to executions by sale of immovable property.
Changes to movables foreclosures
Movables foreclosures, i.e. foreclosures by sale of movable property, have undergone a fundamental change. A new rule has been established that no more than one enforcement proceeding by sale of movable property may be conducted against an obliged natural person. Thus, there is de facto a legal concentration of enforcement proceedings with the bailiff who initiated the proceedings first.
The Amendment also allows obliged persons to prevent the sale of their movable property if they voluntarily undertake to pay at least CZK 1,500 per month more than the amount of the statutory deductions. However, the bailiff will refuse to terminate the movables foreclosure if the ascertained value of all the debtor’s movable property included in the enforcement inventory clearly exceeds 36 times the amount that the debtor would have paid in this way.
Enforcement against retired people and against children and juveniles (not adult people) will be substantially restricted, for example, where the usual household goods cannot be affected. Only practice will show what is and what is not usual household equipment.
Deductions from wages
The scheme for deductions from wages will also be changed, paymasters being entitled to a flat-rate reimbursement of the costs incurred for each calendar month in which they make deductions from the wages or other income of the obligor. The payer will be able to deduct the reimbursement from the amounts deducted before forwarding them to the bailiff.
Reordering of claims order
In the event of enforcement, the principal of the debt will now be repaid first in addition to the costs of conducting the enforcement. Only then will interest, default interest and the costs of the creditor be paid. The rule will thus be different from the Civil Code, but the regulation is closer to the principles applied in insolvency.
Question of territoriality
The question of the introduction of bailiffs’ territoriality, which has been widely discussed in the media, is not finally addressed in the Amendment. However, efforts to introduce it are still being made, and it is argued that this is intended to limit the “entrepreneurial manner” in which the bailiff’s practice is conducted.
You may recall that before the introduction of the institution of private bailiffs, judgments were enforced through locally competent court officials, which proved not particularly efficient. Therefore, to increase the general enforceability of the law, the institute of the private bailiff as an entrepreneur was introduced into Czech law, and this proved to be functional. We would therefore consider it unfortunate if, in the context of dealing with the excesses that occur in the activities of bailiffs, the positive effects of the introduction of private bailiffs into the Czech legal system were reversed. We will continue to monitor developments.
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