Fizinių asmenų bankroto įgyvendinimo Lietuvoje problematika ; Bankruptcy of natural persons: implementation issues in lithuania

Abstract

Analysing implementation of natural bankruptcy, it is very important to make difference between concept of bankruptcy and insolvency. Insolvency is the main reason to go bankrupt. So these to concepts could not be used as synonym. Implementation of natural bankruptcy is very important in social and economic view. Natural bankruptcy can provide a possibility for individual to be discharged from debts and to make a "fresh start". Of course, individual is encouraged to work legal and not to hide his incomes and asset. In other hand, creditors can to cover obligations of individual. However, if the natural bankruptcy will be implemented wrongly, it could be a possibility to abuse of this institute. No doubts, that growth of loan cost and reduction of credit accessibility will be influenced by implementation of natural bankruptcy. Credit is a main reason for insolvency. Insolvency is caused by social and economic factors such as illness, unemployment or reductions of incomes, changes in family or credit risk was not properly evaluated. The prevention of insolvency is more effective mean than eliminations of insolvency results. So, it is very important to provide preventive means. The most important means of preventions that should be in Lithuania is financial literacy and debt counselling, and the system of credit assessment should be clear. To avoid similar situation in the Future, it is necessary to provide rehabilitation to individual. In most countries and in Lithuania too, one of the rehabilitation mean is Plan of debt payments. But individual should also be provides with such help as financial literacy, debt counselling, budget analysing and other similar items. Despite the fact, that there are not regulations of Prevention and rehabilitation means in Natural Bankruptcy Act Project in Lithuania, there are many other implementation issues. The most important issues are that there is not enough protection for interest of creditors. According to many countries insolvency law, petition in bankruptcy could make debtor or creditor. In Lithuania initiate process of bankruptcy can only debtor. Other Natural implementation issues is that concept of insolvency is not introduced correctly. There are no enough criterions to evaluate insolvency of the person. While Natural bankruptcy Act is not implemented in Lithuania, people use possibility of bankruptcy tourism. They can to go bankrupt in other European Union state and that decision should be automatically accepted in Lithuania. Such situation, when Natural Bankruptcy law is not implemented in Lithuania, encourages growth of emigration. Other problem is that creditors could not properly evaluate risk of credit.