Debt settlement and second chance – What the bill provides



The discussion of the bill of the Ministry of Finance “Debt settlement and provision of a second chance”, an issue that concerns thousands of households and businesses, started on Thursday in the Standing Committee on Economic Affairs, an issue that concerns thousands of households and businesses. The treatment, with efficiency, transparency, flexibility and social justice, of the great economic and social problem of the citizens’ over-indebtedness. Private debt in Greece today. Revenue and EFKA, private debt currently stands at 234 billion euros. Of this total private debt, € 106 billion is debt to the tax authority, € 92 billion is debt to the wider financial sector, ie banks and debt management companies, and € 36 billion is debt to insurance. Funds. What are the main features of the law and what are its innovations? The main features of the new legislation – presented by the Minister on Thursday in the Standing Committee on Economic Affairs and will be followed by the positions of the relevant rapporteurs of the parliamentary parties are the following: – The introduction for the first time in Greece, of a precautionary mechanism for the early warning of the citizen in the context of prevention, so that it does not lead to insolvency proceedings. – The early warning mechanism establishes procedures for information and support to natural and legal entities, so that they can cover or restructure their debts, in order to avoid liquidation procedures. – All the individual debt settlement tools that exist today are integrated, in a single framework and a single procedure. Thus – as Mr. Staikouras pointed out – there is an end to the lack of different tools, with their overlaps, which confused the debtors, as well as the gaps that left several debtors without a solution. Debtors who are proven to be in financial difficulty or weakness, have the opportunity to make a fresh start, in two ways: Either they will settle all their debts, or they will get a “2nd chance” through the discharge of their debts, within a certain period of time, after the liquidation of all their assets The “2nd opportunity” ensures that the debts of one generation will not be transferred to the next, perpetuating the problem of over-indebtedness. The bill introduces a comprehensive and automated framework for dealing with insolvency, through the out-of-court debt settlement mechanism, both for for individuals as well as for legal entities. It is conducted through an electronic platform and provides the possibility for Debt restructuring, including the possibility of “cutting” the debt. The provision of regulation is decided by the majority of financial institutions, and in case the regulatory proposal resulting from a computer tool is followed, its implementation by the State and their The proceedings last for a maximum period of 2 months, during which the suspension of the compulsory liquidation of the debtor’s collateral is provided. In fact, it is possible to repay debts in up to 240 installments to banks and other financial institutions, the State and social security institutions. Permanent social policy provisions are also established. auctions, as well as the establishment of a Real Estate Acquisition Body, in order to avoid evictions. In particular, at the stage of the out-of-court debt settlement mechanism, a state subsidy of first home loans is provided for 5 years. That is, something similar to the “BRIDGE” program, but which concerns only vulnerable households that serve or settle their debts. Also, at the stage of enforcement measures, substantial support is provided, through the creation of a private body for the acquisition of real estate, to be selected by the state, through a competitive process. This body will acquire the property that constitutes the first residence of financially vulnerable groups. The aim is to ensure their stay in it, after the payment of rent, which will be subsidized by the state. Also, the possibility is offered to repurchase the property by the debtor, within 12 years, if he so wishes. State support is now a permanent social welfare program. State support is now a permanent social welfare program, with effective and practical protection of the first residence , and not an extraordinary program, as was done 10 years ago in our country. No deadlines and no emergency aids that post-date the problem, and ultimately do not solve it. Directive 1023 / 2019. In case it is not possible to achieve a preventive restructuring of debts, then the possibility of bankruptcy of both individuals and legal entities is provided, with simultaneous discharge from the rest of their debts, in 1-3 years. Bankruptcy are systematized and simplified for the purpose of speedy settlement. Also, simplified procedures for “small object” bankruptcies are introduced, so that the liquidation procedures can be started and completed quickly. Bankruptcy is inevitably accompanied by debt relief, which is implemented quickly: In particular: -Within 1 year, if the debtors lose their property, unless there are objections to fraudulent bankruptcy or concealment of information by creditors.– Ή within 3 years, if they do not have property, in which case they will have to pay the balance of their excess income after coverage Attention to strategic defaulters. Debt relief will not be given to strategic defaulters, and special checks and cross-checks will be carried out, both for the period before and after the bankruptcy, if a settlement is reached, and throughout of the regulation.The management members of the bankrupt legal entities are exempted. This solves a long-standing problem with the responsibility of the managers, who were still responsible for the debts of the company, even after its bankruptcy, if they did not act deceitfully. In particular, clear and specific safeguards are provided to prevent the moral hazard of circumvention and abuse, as it is fully transparent, so that strategic defaulters can be identified through the lifting of banking and tax secrecy and the conduct of special audits. financial difficulty or inability to obtain a settlement of their debts without introducing exclusion criteria. It has specific, electronic and fast procedures, which prevent delays and abuses, through unnecessary court appeals. Source: ΑΠΕ-ΜΠΕ



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