Months of uncertainty end: SC unifies interpretation of ‘unseizable amount’

Early this year, legislators quite exceptionally increased the normative monthly housing costs for 2022. These are usually updated annually to correspond to housing prices; for 2022 however, they were increased for the second time in response to rising energy prices. However, the unclear wording of the law left many people in uncertainty as to whether the increased amount of normative housing costs should be applied also for purposes other than determining housing allowances as envisaged by Section 26a of the Act on State Social Support.

Normative housing costs enter, e.g., into the calculation of the ‘unseizable amount’ in enforcement and insolvency proceedings. To unify the practices of insolvency administrators, some insolvency courts issued guidelines under which the unseizable amount for the purposes of calculating the instalment in debt relief shall not be increased correspondingly to the increase pursuant to Section 26a of the Act on State Social Support. However, such guidelines are only binding for insolvency proceedings before those courts. Nevertheless, they have been referred to by some bailiffs as they requested employers making deductions from wages of employees subject to garnishment of wages not to increase the unseizable amount and keep making the deductions in the original amount without taking into account the January increase of the unseizable amount.

Employers have thus found themselves in uncertainty: on one hand, they could assume that the legislators’ intention was to increase the unseizable amount also for the purposes of enforcement proceedings, especially since this conclusion was also supported by the opinion of the Ministry of Justice; on the other hand, they were requested by the bailiffs to take the opposite approach. It was thus virtually impossible for them to determine which approach to take.

After months of uncertainty, the issue was resolved by the Supreme Court in June. In opinion No. Cpjn 202/2022, the SC has clarified that the increase should be applied not only when calculating housing allowance, but also when calculating the unseizable amount for the purposes of enforcement and insolvency proceedings. Hence, there should be no doubt about this in the future. The increase in normative housing costs is not the only positive change for people facing enforcement proceedings: the increase in the subsistence minimum to CZK 4,620 from 1 July 2022 may bring them further relief.

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