The government’s emergency commission has proposed to the cabinet to cancel quarantine in Lithuania from 17th June but to extend the state-level emergency. The commission, chaired by Interior Minister Rita Tamašunienė, also proposes extending temporary controls at the EU’s internal borders until 16th July.
Quarantine in Lithuania: aid for business
Deferral of Social Security payments
Following the end of quarantine, SODRA (Social Security) until 17th August is awaiting requests from COVID-19-affected businesses to delay payments of the unpaid contributions, during the quarantine in Lithuania period. Covid-19 affected businesses do not need to pay contributions from the start of quarantine in Lithuania, and two months after, and to cover the accumulated debt over a maximum period of 5 years. SODRA is ready to make decisions in a simplified procedure, COVID-19-affected companies will not have to justify their solvency and no interest will be charged. By the 17th August, requests should be submitted to SODRA to defer the payment of contributions, in which the business itself can indicate the amount of debt and for what period it wants to defer or pay contributions. Debt can be deferred for up to a year (deferred debt contributions do not have to be paid in a deferred period), after which the contributions can be spread evenly each month for a maximum period of 4 years. Thus, the total term of fulfilment of obligations is no longer than 5 years.
Deferral of existing loans
To alleviate the situation of customers facing difficulties with quarantine in Lithuania, financial and credit institutions belonging to the Lithuanian Banking Association (LBA) have committed to a joint moratorium to defer loan payments to companies for up to 6 months without changing contract terms and interest rates. The moratorium applies to business loans of up to EUR 5 million per group of companies. Business customers of financial and credit institutions that have signed the moratorium will be able to use it by contacting their financial service provider in writing. Only interest or other periodic payments will remain payable during the deferral period.
ASAP (Accounts Payable Loans)
Also, under “the Accounts Payable Loans” (ASAP) facility, small and medium-sized enterprises that was affected by quarantine in Lithuania have the possibility of borrowing funds for not paid but issued invoices and for outstanding invoices, the only condition: the invoices must have been issued from 1st January until 31st March 2020. The minimum amount of 500 EUR and the maximum amount of 500 Thousand EUR can be granted to the borrower.
Aid for the population :after the quarantine in Lithuania
Deferral of an existing home and consumer loan
Residents who have lost their job at the period of quarantine in Lithuania, or at least a third of their normal income, but have a home, or consumer loan can ask the lender to defer the payment of contributions for 3 months. This is provided for in new amendments to the laws governing consumer and home lending activities to help residents who experienced or are experiencing financial hardship as a result of the prolonged quarantine in Lithuania. Until now, the right to defer credit payments with a housing loan was granted only in the event of loss of employment, death of a spouse, divorce or incapacity for work, and the possibility of deferring credit payments for consumers with consumer loans were not provided by law at all.
Other amendments to the law do not provide for the repayment of debts. There were only recommendations from the government to help debtors affected by quarantine in Lithuania by offering payment schedules, etc. As there is still no Law of Debt Collection Companies of the Republic of Lithuania, it is quite easy to negotiate with the debtors, find joint solutions, to compromise and offer discounts.
The Parliament of the Republic of Lithuania are working on a Law of Debt Collection Companies project, which, now, consists of 6 sections:
- general provisions;
- debt collection activity license;
- rights and obligations of debt collection companies;
- supervision of the activities of debt collection companies;
- liability for violations of this Law and the procedure for the investigation of violations;
- Final Provisions.
Nevertheless, The Parliament of the Republic of Lithuania is also working on changes of The Law on Consumer Protection of the Republic of Lithuania. The Law is planning to be supplemented with 9th Section “Administration of debts” which will include five chapters (Regulation of debt administration activities; Form and content of information about debt; The rights and obligations of the debt administrator; Reimbursement of debt administration costs; The debtor’s application to the debt administrator).
The main and the most important addition in changes after quarantine in Lithuania would be Chapter 53 – Reimbursement of debt administration costs. Up to now there has been no regulation on administration costs. Debt collection companies use their own graduations to determine these costs regarding the amount of the debt and to whom it is intended (natural/legal person). If/when these additions will be accepted, debt administration costs will be regulated by law.
We are carefully monitoring the situation of the end of quarantine in Lithuania, but at this point these are only projects of the law, no final version of it, nor decision.