The improved platform of the Extrajudicial Debt Settlement Mechanism that incorporates the recent legislative regulations of the Ministry of National Economy and Finance came into force.
Through the Mechanism, debtors have the possibility to settle all their debts ensuring an automated solution and avoiding court proceedings.
The aim of the new regulations, as stated in the relevant announcement, is to protect truly vulnerable debtors and to improve the functioning of the Mechanism for the benefit of debtors in general.
The following changes have been incorporated into the platform:
– An additional up to 28% “haircut” of the debt in collateralized loans: The necessary algorithm improvements have been made to the platform, which are automatically applied to applications that proceed to be evaluated by creditors. The improved proposal is automatically generated by the system and submitted to a vote by the funding bodies.
– The proposal to restructure the debt of vulnerable debtors (for whom the relevant Certificate of Vulnerability has been issued and submitted) is in principle necessarily accepted by the Banks, the servicers and the State. The borrower retains the right to reject the proposal, while financial institutions in case of disagreement will have to go to court (and bear the costs of the process) to challenge the proposal, if they have evidence that the vulnerable is not really vulnerable.
– The interest rate for all debt arrangements to the State, Banks and debt management companies is set at 3% fixed for 3 years. It is noted that the interest rate for debts to financial institutions was until now euribor plus 2.5 points for secured debts and plus 3 points for unsecured debts.
For debt settlements to the State and Social Security Agencies it was already fixed at 3% fixed. The new fixed interest rate of 3% for debts that are de facto secured or covered by other privileges and 4% for unsecured debts, for the next 3 years is henceforth applied to applications that are evaluated by creditors and the debtor is provided with the proposal of the algorithm.
– Persons who “inherited” debts to the State and Social Security Institutions from businesses that have been put into liquidation or liquidation are given the possibility to join the extrajudicial mechanism.
– The provision has been incorporated for the granting of a proposal which may include an advance payment of up to 10% on the debt after the proposal as restructured by the algorithm, as long as the auction program has been notified to the debtor. This arrangement does not apply to vulnerable debtors.
Benefit of joining the Extrajudicial Mechanism
According to the protothema, the Extrajudicial Mechanism is a holistic and sustainable solution for natural and legal persons with debts of more than 10,000 euros to the State, Social Security Agencies, banks, servicers as well as for debts and in favor of third parties collected by the tax administration. Finally, it is recalled that the limitation that applied in the past for 90% of debts to a single institution has been lifted. The benefits of joining the Mechanism include, among others, the following:
* Suspension of individual and collective enforcement measures against the debtor as long as the regulation is observed.
* Issuance of proof of tax and insurance awareness.
* Regulation of loans guaranteed by the Greek State.
* Ability to write off principal, interest, fines & surcharges.
* Partial debt cancellation while avoiding recourse to court solutions. A prerequisite is the proof of real financial weakness on the part of the debtor, the co-debtors as well as the guarantors.
* Creation of a long-term debt repayment plan reaching up to 240 installments for debts to the State and Social Security Institutions and up to 420 installments to financial institutions.
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