Loan sharks will lend everyone money

Help with over-indebtednessThe scare of the Czech loan sharks

Only a discreet doorbell at the bottom of the door indicates the man who is currently shaking up the Czech credit industry. An employee logs on to the intercom. On the second floor of the inconspicuous office building in Prague, the man at the reception counter opens the door to a small conference room with a plywood table and white walls.

"Would you like coffee, tea, water? The lawyer is coming soon!"

This article is part of the five-part series of reports Czechs in Debt Trap.

The "lawyer" is 35 years old, his name is Petr Nemec and he specializes in thwarting the bailiffs and windy credit brokers. Petr Nemec is a stocky man with elegant glasses and a black polo shirt, his voice energetic:

"Most of the time, we don't meet with clients, contact is via the Internet. If we were to meet everyone - that wouldn't work at all."

Beat dubious credit brokers at their own gun

Petr Nemec has a website with the catchy name "The bailiff has bad luck", and anyone who is in foreclosure can contact him. "We live from taking percentages in cases where we can help."

Petr Nemec makes the instruments of the dubious credit brokers his own: just as they automate and digitize his appeals and lawsuits. Petr Nemec starts above all with formal errors in contracts:

"Sometimes, however, it is also about the foreclosure being inappropriate and violating fundamental principles of the rule of law. Imagine someone takes out a loan of the equivalent of 800 euros and the bailiff is now demanding 12,000 euros with all fees and interest Suppose further that this debt increases every single month because of contractually agreed penalties by 400 euros, i.e. by half of the original loan amount. The debtor pays 250 euros every month because he cannot pay more of his wages. In this case if the debt does not decrease, it just keeps growing - that would be an endless matter.

One debtor, several bailiffs

Thanks to the efficiency of his work, Petr Nemec has become the horror of many private loan providers and bailiffs - according to his own statements, he has now stopped more than 3,000 foreclosures, and around 100 new inquiries are added every week. He fights his way through a thicket of framework conditions that are specific to the Czech Republic.

This includes, for example, that bailiffs, unlike in Germany, are not civil servants - they are mostly lawyers who see this as competing business. That is why a debtor often has to deal with several bailiffs at the same time, because each creditor has hired a different person for his outstanding debts - and each one bills the debtor with his own fees, his own travel expenses and expenses.

Many foreclosures are based on outdated judgments

And then there are also private arbitration tribunals, which are named as the competent authorities in many loan agreements and which almost always decide in favor of the creditors who also pay them.

"In the 1990s the Czech judiciary was not the fastest and the creditors had problems getting judgments. So they said: We set up arbitration tribunals, they do it faster and cheaper. And in fact, many of them made 17 decisions a day , including weekends and holidays; this shows that they simply printed it out automatically. Today, such procedures are forbidden. "

Many of the foreclosures are still based on the judgments of these arbitration tribunals - and that is where Petr Nemec starts. Today, he says, the whole system is better adjusted. And then he says a surprising sentence:

"It's good that we are all afraid of the bailiff. It would be nonsense if we didn't have that fear - it would be just as if criminals weren't afraid of prison."

"We're clearing the market of bad lenders"

What needs to change is above all the fact that the bailiffs are not economically independent from the creditors. But does he not help to deprive the creditors of the money that is due to them from defaulting debtors? Petr Nemec shakes his head:

"We help debtors at the expense of dishonest creditors, and that is ultimately in the interests of honest creditors. When an obscure company turns 20,000 kroner into debt and the debtor spends his entire life in foreclosure, then come the decent banks, With whom he has also taken out loans, never to the train. So we shoot (sic!) this foreclosure: The dishonest get nothing, and the honest get their money. So we clear the market of the bad lenders. "

Whereby Petr Nemec, the lawyer, would not limit lending to the strictly regulated banks either. Private loan providers have their place, he says, and he often hears gratitude from his clients: For example, if they almost lost their apartment and only got money for rent from private credit companies.

"The experience from Slovakia is interesting for us: There non-banks, that is, private credit companies, have almost disappeared from the market after strict regulation. Those who need money there go to the black market - and they are real usurers."