In Switzerland, nearly half a million people are struggling with debt. This week, parliament discussed new measures that may offer relief to those unable to dig themselves out of insolvency, reported RTS.
In Switzerland, personal bankruptcy does not extinguish your debts in the same way as it does across much of the rest of world. Instead, once all your assets have been liquidated, any remaining creditors receive IOUs for any money still owed to them. And while it brings an immediate end to debt proceedings and allows you to spend all of your salary, any assets you inherit or accumulate post bankruptcy can still be claimed by creditors.
In addition, it is possible to inherit debt from an insolvent estate under Swiss law. This can generally be avoided by renouncing inheritance, however it is complicated and requires awareness and planning to ensure the right forms are filed within prescribed time limits.
The key criticism however, is the impossibility of permanently erasing debts through personal bankruptcy. One proposed solution is a system of time limited deductions from salary, after which any remaining debt is extinguished. This idea was put forward by Céline Vara, a parliamentarian from the Green Party.
Other politicians are more cautious about change. Jean-Luc Addor, a parliamentarian from the Swiss People’s Party (UDC/SVP), said that while it is necessary to find solutions, a balance must be found between protecting debtors and creditors.
Other ideas discussed are to limit the amounts health insurance companies can recover from those who have declared bankruptcy and to include taxes in the definition of the minimum amounts people need to cover basic expenditure.
Those deeply in debt with little chance of earning their way out of it will be hoping Switzerland’s federal parliament can eventually agree on changes that offer longer term debt relief.
More on this:
RTS article (in French) – Take a 5 minute French test now
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