Bankruptcy law: What debtors need to know

After many 24 hours of political controversy, the new bill “Debt Settlement and Second Chance for Households and Businesses” is the new institutional framework for the consolidation of laws on debt restructuring, insolvency / bankruptcy and it is doubtful whether it will be understood by the citizens. Debts swelled in the previous years of the crisis and according to official figures, private debt amounts to 234 billion euros. The 106 billion euros are debts to the tax authority, the 92 billion euros are debts to the wider financial sector, ie banks and debt management companies, and the 36 billion euros are debts to the Insurance Funds. Ministry of Finance for the out-of-court mechanism show that out of the 63,400 companies and professionals that entered the platform, 7,300 applied and 2,200 completed the debt settlement process. In addition, from the summer of 2019 until the end of May 2020, 252,529 loans were settled, amounting to 12.3 billion euros, including those relating to the 1st house. For the protection of the first house, how evictions are avoided, what happens to the strategic defaulters and the vulnerable groups, the Secretary of Private Debt Management Fotis Kourmousis answers Technologybud. 1. Does the new bankruptcy abolish all protection of the first home? The new Law on debt settlement and the provision of a second chance protects the first home of vulnerable households, in 2 ways: at the stage of the out-of-court mechanism: by settling the debts to banks and the public in up to 240 installments and with a State subsidy of 1st home loans for 5 years, in order to avoid auctionsB. in the bankruptcy stage: with the establishment of a Real Estate Acquisition Body, in order to avoid evictions. The Agency is obliged to buy the 1st house and re-rent it to the citizen, while the State provides housing allowance (ie rent), as established in 2017. The citizen has the right to repurchase the property within 12 years, if he recovers financially. 2. Does it provide for the bankruptcy of natural persons, even without their own initiative, but at the initiative of the banks? Now both the debtor, a natural person and the creditor can file for bankruptcy. However, if a borrower does not pay, then the banks follow other preferred methods of collection, such as foreclosure and real estate auctions. If a borrower has real estate, then the bank will auction to collect part of the debt and in addition will seize accounts to collect the remaining debt. The debtor can then file for bankruptcy, in order to be released from his debts.3. Who can – with debts – join the new bankruptcy and how? Every natural and legal person can apply to the new out-of-court mechanism, in order to settle their debts to banks, loan managers and the public, in up to 240 installments (ie repayment in up to 20 years). If a person is unable to repay his debts with the above regulation, then he is “judged” to have gone bankrupt and the bankruptcy and debt relief procedures are in progress, ie all his debts are written off (in 1 year if he lost property or in 3 years if not lost property). The write-off of debts is carried out by a court decision, so that the court can confirm that there was no fraudulent behavior of the debtor.4. How do strategic defaulters differ from socially vulnerable groups? Unfortunately, there is no “list” of strategic defaulters, ie those who do not pay, while they have property which they hide. The only way to detect them is to remove banking and tax secrecy, as well as to conduct cross-checks and checks by creditors, public and private. This identifies who is vulnerable and who is a strategic defaulter. However, we must note that these two groups are the two “extremes” of the debtor population and we must not forget all those who are in the “middle”. That is, those who do not meet the criteria of the vulnerable (ie their income exceeds 7 thousand euros per year) and are not strategic defaulters (ie do not have income / property sufficient to repay their debts). Follow it on Google News and be the first to know all the newsSee all the latest News from Greece and the World, at

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