Family Insolvency Act Proposed

The proposal argues that, just as there are rules that help over-indebted companies, individuals must have a system allowing them to get out of financial insolvency.

Wednesday, December 14, 2011

The preliminary draft of the Family Insolvency Law for Latin America and the Caribbean will be studied from January by consumer associations and representatives from the commercial, banking and finance sector in Panama.

Giovani Fletcher, president of the Panamanian Institute of Law, Consumers and Users (Ipadecu), notes in an article in Prensa.com, the goal is "to create a tool that very quickly and effectively can rehabilitate the credit status of those who for various reasons have fallen into financial distress and are not subject to credit, affecting their family. "

The Office for Latin America and the Caribbean of Consumers International (CI) is the leading international body driving this project. They have carried out research into consumer credit, contracts and advertising in banks in Argentina, Brazil, Chile, Peru and Uruguay, noting that none of the countries had a law to regulate situations of consumer over-indebtedness, as exists in many other nations.

Basically, what is proposed is a court procedure to reach an agreement with creditors to be held within the scope of a law enforcement agency. The person invoking the benefit of the law must demonstrate that they have fallen into excessive debt for reasons such as job loss, unemployment, temporary or permanent disability, or serious or chronic disease involving excessive spending on treatments and medications, among other reasons.

A similar proposal was presented last week before the Senate of Chile.



More on this topic

Initiative to Speed Up Insolvency Processes

December 2019

A bill being discussed in the Costa Rican Assembly aims to accelerate and simplify the processes followed by companies when they request to be declared in a state of insolvency or bankruptcy.

Currently in the country there are two liquidation processes, which are bankruptcy and insolvency, in addition to two others in which "...the debtor makes proposals to creditors to reach a solution, which are the administration and reorganization with judicial intervention, exclusively for companies, and the preventive agreement, for companies and individuals."

Unstoppable Consumer Credit in Costa Rica

September 2017

In 2010 average household debt per household was around $3,000, and last year, just six years later, the figure exceeded $6,500.

Data compiled by Nacion.com shows that the average debt of each Costa Rican household indicated in the analysis only takes into account financing with supervised entities, meaning that it could be be omitting loans taken out for consumption through other sources of unregulated financing, such as pay day lenders and pawn shops, among others.

Panama: New Bankruptcy Law Firms

March 2016

The recently passed law allows for the efficient reorganization or liquidation of finances of companies that become insolvent.

From a statement issued by the National Assembly of Panama:

The creation of a bankruptcy insolvency regime which aims to save companies from closing has received its third reading in the National Assembly.

Panama: Bankruptcy Bill

October 2010

The proposal seeks for insolvent companies to be eligible for a payment plan according to their financial capacity.

The project to be submitted to the Cabinet by the Ministry of Commerce and Industry, brings together the proposals of the Panama Banking Association and the Chamber of Commerce, "...

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