A Law for Loan Sharks

By • on June 4, 2012

It sounds unbelievable, but when it comes to money acquired easily in the Czech Republic, anything is possible. While the Slovakian government is trying to limit loan-sharking by several new arrangements in the frame of social benefit pay out, loan sharks in the Czech Republic now have incredible power to extort and to misuse the misery of the poorest citizens through new legislation.

A majority of the unemployed Roma belonging to this poverty stricken group are often dependant on loans with incredible interest rates from loan sharks.

For better understanding of what is about to come into effect, a short excerpt from an article discussing this issue is copied below.

It is interesting to ponder why and for whom this kind of law serves its purpose. A single loan shark often has whole Roma families or even settlements under his control. His power can force any debtor to testify that he lent money to some other debtor or that he lent money he in fact did not lend. Everyone would expect that common law should serve justice, but in this case it proves to be like legalization of extortion. What an absolute absurdity! Creators of this law seem not to have heard of loan sharks and their practices?

Roma, dependant on loan sharks and already living in poverty and fear, have another reason to worry.

It is a wish of every dodger to have a law behind their back protecting them and offering incredible possibilities for dirty jackpots. But “misfortune does not walk across mountains but across people,” says a Czech and Slovak proverb.

However, not only some poor Roma may become victims. It is always possible to find a witness who would swear in front of a judge that even millions have been lent on verbal agreement to some rich businessman who has not paid off the debt yet. Criminals will have endless options to rake up a fortune because this law will support them. A huge space is about to open up for corruption and any filthy practice.

Selected citations from the published article:

“Contract, fine and debt approval will be valid even if the deal has been made only verbally between the debtor and the lender. This will function as a form of proof in a courtroom,” said Petr Tégl, a lawyer who co-created the new law at the seminar on debt recovery in Olomouc.

According to him, the new law that came out from the craft room of Jiří Pospíšil, Minister of Justice, will from the 1st of January 2014 notably strengthen the capacity of all creditors – may it be a serious company or speculators in need.

In cases where a verbal agreement will be made, even though it explicitly would be a matter of a civil proceeding and thus the agreement should be written, the new law will disable the judge to void the agreement. “Absence of the written form in cases when it will be mandatory according to the law will not mean its absolute invalidity though,” stated Tégl. Not only what you sign will matter but also what you will give a nod to – whether it will be at a long-established company or at a dirty motel by the road. Consequences of the new law on the tense territory of debts and their enforcements make even lawyers puzzled because according to them it will depend how the judges will interpret the matter in practice.

“We need unification of legal norms in civil law. But one thing is what the authors of the new law explain and how the law should function and the other thing is how the law will be really applied practically – because it may be utterly different from one court to another,” said a lawyer working in north Moravia who wished not to be named to Právo daily.

(Photo from Flickr user poplinre, Creative Commons)