Social Democratic Party (SDP) leader Pedja Grbin and Sandra Bencic of the Green-Left Bloc on Sunday presented a new initiative to improve the position of debtors and facilitate their exit from the debt trap.

The two parliamentary groups have put forward a bill proposing to change the method of payment calculation so that each payment covers principal as well and not just interest and costs, Grbin told a press conference outside the Croatian National Bank.

The bill provides for an absolute statute of limitations in civil cases for debts arising from consumer relations and not exceeding two net monthly wages, provided that the debt could not be recovered within five years, he added.

“Based on this method of calculation, debts will be paid off, but they will be paid off sooner and will not become eternal,” Grbin said, adding that because of the present Enforcement Act it can happen that people with monthly wages of €600 or 700 pay off their debts their whole lives without paying off even one euro of principal.

“That is completely unacceptable and represents a form of modern debt bondage. In a democratic, well-regulated, socially aware and fair society, that is simply not allowed,” the SDP leader said.

He said that they had submitted their initiative to Parliament and expected it to be put up for discussion and to a vote in 60 days.

Bencic said that with this initiative to amend the Obligations Act they were continuing their efforts to facilitate the position of the most vulnerable social groups.

She recalled that a few weeks ago they had sent to Parliament a proposal to amend the law governing the sale of debts to debt collection agencies. They also approached the Croatian National Bank over the leakage of hundreds of thousands of debtor data from these agencies and demanded a moratorium on debt sales until these agencies were regulated.

Benčić called on the government to accept their proposal and put it up for discussion as soon as possible “to prevent a social collapse faced by many citizens.”

“Our wages are low and prices are high, and we have no safeguards available like other European countries to prevent our households from falling into debt bondage,” the Green/Left member of Parliament said.