The law granting debt relief for the poor, passed in parliament just over two weeks ago, creates a legal basis for agreements between debtors and creditors such as utilities, insurers, banks and the revenue service.

A few days after the legislation was enacted in parliament, representatives of the state, municipalities, public utilities and banks signed an agreement pledging to cooperate in the debt relief effort.

Only debt incurred before 2014 will be eligible for write-off, while the window for signing relief agreements is six months, according to the Ministry of Labour, the Family, Social Affairs and Equal Opportunities.

The ministry has told the STA that around 70 municipalities have joined the project of debt forgiveness, including the largest municipalities of Ljubljana and Maribor, and a number of power distributors, banks and insurers.

Applications will be available on a special on-line portal as well as at social work centres and the offices of the Slovenian Red Cross and Caritas and the Association of Friends of Youth of Slovenia.

Debtors who received welfare payments for the poorest in the first half of this year qualify for the debt relief, while people who have declared personal bankruptcy are not eligible. About 100,000 will be eligible for the scheme, according to the ministry.

While companies typically have to pay tax bills on write-offs, under the debt write-off law the tax liability will be waived. Individuals meanwhile do not need to pay personal income tax related to the write-off.

Municipalities are expected to write-off debt related to bills for kindergartens and meals in primary schools, while banks are expected to write-off debt related to various financial transactions.

The Financial Administration (FURS) will be allowed to write off amounts of up to 50 euros, mainly income tax and administrative and court fees, but the total amount of relief provided by the state is capped at a million euros.

For this reason one of the criteria for the write-off will be the order in which applications were filed, according to the ministry. Companies that signed the agreement will meanwhile determine the amount they will write off on their own.

The bill is a part of a mini relief package for the poor that also includes forthcoming legislation to exempt most welfare payments from debt recovery proceedings.