When They Ring at Your Door
The use of distraint -- the seizure of property to cover unpaid fines -- is rising sharply in the Czech Republic and putting a growing number of people out of their homes
When 34-year-old Kryštof Rimsky found a letter with a green stripe on it in his postbox, it was the beginning of a nerve-wracking process. The distraint (order of execution) against him applied not only to his newly acquired house but to all his assets. Eventually, he managed to borrow the more than 200,000 crowns he allegedly owed from family and friends, which he reckons saved him from life on the street. But as this young actor says, the bitter taste of how harshly his country punishes a few unpaid tram tickets will stay with him forever.
"I didn't have a clue at the beginning how much money was at stake. The letter wanted me to pay 15,000 crowns. So I went to the property execution authority," said Mr. Rimsky, describing events at the beginning of last spring. After a few hours' wait, he was in for a shock. There were six other distraints waiting for him, totaling 70,000 crowns; they would reach his postbox one by one, he was told. A further 11 distraints were pending in court and another 14 were in the pipeline. In total, he faced 31 orders of execution, all for riding black a few times in Prague more than 10 years ago.
"I was a wild student back then and didn't care much about public transport tickets," says Rimsky now. "In truth, I didn't pay those few fines and let it slide." Being an irresponsible student is no excuse for riding without a ticket but at least two important elements of his story require further investigation. First, the breathtakingly high number of distraints. And second, the method of debt recovery, which could be summed up as a production line of newly homeless Czechs.
'Their Work Costs Something'
"After I left school I settled down, found a job and started a family. I had a permanent address the whole time and it would have been enough if the executors sent me a letter with a warning," says Rimsky. "I asked the authority if I could pay in installments or if they could merge all the orders into one. But they didn't want to hear about anything of that kind. They just went on threatening to seize my house."
Rimsky is not alone. On the contrary, the biggest chunk of the Czech Republic's one million distraint orders are issued on behalf of Prague's public transport authority -- more than 200,000 cases. That something is badly wrong here is obvious not only to the current justice minister but also to the executors themselves.
"The number is indeed alarming," says Jana Tvrdková, the president of the chamber of executors. She acknowledges that the vast majority of distraints owe their existence to debts of a few hundred crowns -- unpaid public transport fines, telephone bills, parking fees.
Slowly but surely the executors' fees are becoming notorious: 3,500 CZK for the lawyer who prepares the distraint; the same price for issuing the order itself; 3,000 CZK as a payment for the executor; and 1,500 CZK as a court fee. In total, it costs at least 12,000 CZK for each distraint, plus interest.
As in Rimsky's case, each debt is dealt with separately, even if the combining of, say, two unpaid public transport fines would make more sense. The executors aren't willing to consolidate distraints since they would lose money and their profession wouldn't be as lucrative as it is now.
Their explanations for this are far from satisfactory. "It would be complicated to put it together," says Tomáš Sokol, a lawyer who works on distraint orders with the Prague public transport company. "We deal with the cases chronologically, as they appear."
"These small debts have to be handled by highly qualified people and their work costs something," says Tvrdková, defending her members.
Mr. Rimsky is convinced that there's a reason for this strategy of hammering debtors. "It's the real estate," he says. "I believe the executors only wanted my house. They've never shown the slightest interest in my bank balance. Only the house."
It might sound crazy but there have been reports of executors buying seized properties for only a fraction of their market price -- the same route, incidentally, by which the chamber of executors acquired the extravagant Prague villa that's now their central office. This deal was orchestrated by Juraj Podkonický, the chamber's former president, who now handles the vast majority of claims issued by the Prague public transport authority. In total, Mr. Podkonický has signed every fourth distraint issued in this country, even though there are more than 120 executors available.
As the situation currently stands, big players like Podkonický have no incentive to give up this lucrative business. On the contrary, in an economic crisis -- even as people slip further into debt -- public authorities are starting to use debt recovery as a way of padding their empty budgets.
Lawyers and executors don't see any reason for making changes such as the mandatory consolidation of distraints into just one order. But both anger and anxiety are growing. Tvrdková acknowledges that the chamber is considering "a model where one executor would be responsible only for a strictly assigned region, so that the distraints wouldn't end up in the hands of just a handful of people." And Justice Minister Daniela Kovářová says her office "is working on an amendment to a current bill that would limit some distraints." More changes, if any, are to come only after the parliamentary elections.
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