Protected account – a shield against unauthorised asset seizures and debt traps
As a protection against unauthorised asset seizures, obligated persons can open the so-called protected account starting from 1 July. The protected account cannot become subject to seizure and shall be used to deposit financial resources that are not subject to seizure such as maintenance for children or unseizable salary minimum. The concept of protected accounts is supposed to be a solution of multiple seizures when the income of the obligated person is subject to salary deduction and the remaining amount is subject to another seizure – this time by ordering a receivable from the account. Let us have a look at how this new instrument will work.
The purpose of the protected account
The essence of the protected account is the protection of debtors against unauthorised seizures or enforcement of judgements. Debtors who face multiple seizures are in practice often in a situation where an amount is deducted from their bank account that should not have been subject to seizure such as the unseizable salary minimum, payments of maintenance for children or e.g. some social allowances (“protected income”).
If the obligated person received their salary after deductions have been made by their employer based on one seizure, the amount paid out could in practice be subject to another seizure by ordering a receivable from the account. The obligated person could thus lose the amounts that should be unseizable according to the law. A solution to this situation should be a special protected account that cannot become subject to seizure by ordering a receivable and that serves exclusively to deposit protected income.
Opening a protected account
The obligated persons will apply for a protected account at the bank that maintains their existing bank accounts affected by seizure by ordering a receivable from the account (“primary account”). The application will include a statement made by the obligated person that they do not have any other protected account. The bank is obliged to conclude an agreement on protected account with the obligated person and the protected account has to be opened within five workdays from the submission of the application under the condition that the bank was provided with necessary information and received relevant documents from the court. In practice, the obligated person first has to ask the court to provide the bank with the essential information and materials.
The bank has to designate the protected account so that it is obvious that it is a protected account and all courts (certified enforcement administrators) that ordered the enforcement of a judgement by ordering a receivable from the primary account have to be informed.
Following a written request, the obligated person’s debtor of the protected income has to provide the court or the obligated person without undue delay with a confirmation of the number of the account from which the protected income is paid. Considering that based on this confirmation, the bank opens the protected account and transfers finances to it, the law explicitly stipulates that the debtor of the protected income is not allowed to pay the obligated person other amounts than the protected income from the account stated in the confirmation.
Functioning of a protected account
Opening and maintaining a protected account is statutorily free of charge. Other conditions and fees are subject to the same rules that apply to the primary account. At the same time, the banks are forbidden by the law to change these conditions based on whether or not a seizure of the account owner’s assets is underway.
The day following the opening of a protected account, the bank transfers an amount corresponding to three times the subsistence minimum to the account. This amount is excluded from the enforcement of a judgement to order a receivable from the account. Third parties will not remit their payments directly to the protected account, they will continue using the primary account of the obligated person. The banks will be responsible for transferring the protected income credited to the primary account to the protected account by the end of the workday.
When does the protection of the protected account potentially end?
Every obligated person is allowed to have only one protected account. Should it become apparent in the course of proceedings that an obligated person has more than one protected account, it will be decided by the court which account will remain protected. Since banks will be required to designate the protected accounts in a unique way, we assume that in practice, it will be possible to find out if the obligated person really has only one protected account.
Courts may further decide that an account is not protected if the obligated person purposely provided the bank with false data in their statement that they had no other protected account or if they purposely provided false data about the debtor of the protected income.