If you’re neck deep in debt and struggling to pay back your creditors, you could have some of your borrowings written off for good – provided you live in Croatia.
Through its rather unusual programme “Fresh Start” that was approved in January, the government of Croatia, along with several banks, utility companies, telecom operators and other firms has agreed to scrap the unpaid bills of its poorest citizens. Banks had earlier blocked the accounts of more than 300,000 Croatians because of unpaid debt.
Around 60,000 people are expected to benefit from the campaign. Households who make less than 1,250 kuna (Dh682.87) each month will see up to Dh19,127 (35,000 kuna) worth of debt cancelled. For them to qualify, however, residents should be able to establish that they don’t own a property or have some savings.
“We assess that this measure will be applicable to some 60,000 citizens,” Deputy Prime Minister Milanka Opacic was quoted by Reuters as saying. “Thus, they will be given a chance for a new start without a burden of debt.”
While there’s no “Fresh Start” campaign in the UAE, money experts said thousands of residents badly need some government intervention to get out of their mounting loans.
According to Preeti Bhambri, managing director of personal finance website MoneyCamel.com, they receive requests for help on a daily basis from struggling borrowers in the UAE.
“Every day we receive requests from people who have a low salary and multiple debt products that they cannot repay successfully. There are many low-income people stuck with spiraling debt which in the end leaves them with no other choice but to leave their job and UAE without paying off,” said Bhambri.
Bhambri said that there is only one major bank that offers to consolidate residents’ loans at a low interest rate, but this service is open only to workers in certain accredited companies.
“While the UAE Government may not be able to [launch a programme similar to Fresh Start], they can mandate banks to start debt consolidation programmes for those struggling with debt,” Bhambri told Gulf News.
“These programmes should be structured around reducing payment pressure on individuals by following three basic principles- a significantly lower interest rate, much longer loan tenures and restrictions on taking extra credit in any form. Such an initiative would indeed be welcome by all.”
