Extrajudicial Mechanism: How debtors who want to keep their homes benefit

One of the seven tools provided by the Ministry of Finance, through the relevant platform, to debtors who do not want to lose their own, is the , who provides multiple advantages and benefits. This is because, according to the Ministry of Finance, the Executive Mechanism is a holistic and sustainable solution for individuals, businesses and freelancers, as well as for private law individuals, other than individual property owners, who do not pursue an economic purpose, but are engaged in economic activity, to regulate their debts to the State, Social Security Bodies, banks and services. At the same time, it provides the possibility to regulate debts also in favour of third parties collected by the tax administration. Through the Mechanism debtors have the ability to regulate all their debts, ensuring an automated solution and avoiding judicial proceedings. With recent improvements, debtors in the mechanism benefit from: A reduction of up to 28% of debts for all debtors and loans covered by real security with an improvement in the relevant algorithm. 3% fixed interest rate for 3 years for all arrangements (Public, banks and servicers). In addition, especially for vulnerable debtors, the new framework defines the automatic and compulsory acceptance by banks and public authorities of their debt restructuring proposal if the credit guarantee of a vulnerable debtor has been issued through gov.gr. The borrower reserves the right to reject the proposal while banks and servicers, in the event of disagreement, should bring legal proceedings (including the cost of the procedure) to challenge the proposal if they have evidence that the vulnerable is not really vulnerable. The application shall be submitted electronically through the electronic platform using the Taxisnet passwords. Benefit of joining the Mechanism Suspension of measures of individual and collective forced execution against the debtor (e.g. auctions and seizures), provided the arrangement is complied with. Issue of tax and insurance information. Settlement of loans guaranteed by the Greek State. Up to 240 instalments for repayment of debts to the State and Social Security Bodies and up to 420 instalments to financial institutions. Possibility of deleting basic debt, interest, fines & increases. Partial debt write-off, while avoiding recourse to judicial solutions. The requirement is to prove a real financial weakness on the part of the debtor, co-payers, and guarantors. All debtors (natural and legal persons) with a debt amount exceeding EUR 10,000 in respect of outstanding, current or serviced debts shall have the right to submit an application if there is evidence of a deterioration in their financial situation by at least 20%. The rules may also include debts to the State and Social Security Bodies, which have been established to the detriment of undertakings which are in a solution or liquidation or have ceased to exist, at the request of the third person responsible for the entire undertaking. It is underlined that the previously applicable 90% liability limit has been lifted to a single entity. Registration is not permitted: To those who have already applied to the court for ratification of the resolution agreement or a request for their declaration of bankruptcy or for entry into the bankruptcy proceedings of Law 3588/2007 or for the application of the out-of-court debt settlement mechanism of Law 4469/2017 or an application for over-indebted Law 3869/2010 or for the protection of the principal residence of Law 4605/2019. In these cases there must first be a waiver of these procedures before the submission of membership to the Extrajudicial Mechanism of Law 4738/2020. For those who have been subject to one of the above procedures or Law 4307/2014 or are pending a judicial decision to subject them to those proceedings or have not been past at least 15 months since the decision to place them. When it has not yet been 12 months since the completion of a previous Extrajudicial Mechanism process. Where the applicant is a legal person, the managing director, administrator or partner has been convicted by irrevocable decision of certain offences (especially tax evasion, laundering, embezzlement, fraud, fraud, fraud, fraud, etc.) to the extent of a felony (unless it concerns the offence of fraud against the Public or Social Security Body, so it is sufficient to condemn a misdemeanor). In particular for managing directors, administrators, partners of legal persons, the offence must have been carried out in the performance of their duties. Deleting debt and fixing doses The proposal to regulate the debts arises automatically on the basis of the platform’s specific algorithm and takes into account the value of the property and the disposable income, after covering the reasonable and inflexible costs, both the debtor and its guarantors, provided that they have withdrawn confidentiality and have subsequently completed the actions provided for. With the recent legislative intervention the algorithm for real-estate loans was improved in relation to the previous scheme, where the recovery amount is calculated on the basis of the liquidation value of the property. The mechanism provides for partial write-off: up to 75% of the basic debt to the State, up to 85% of the outstanding debt increases to AADE and e-EFCA, up to 95% of the AADE’s fines, up to 80% of the basic debt, and up to 100% of the interest on banks and loan managers. It is noted that in cases of non-sensitive persons for whom an auction programme has been issued, a limit of up to 10% of the debt is set at the level of the advance that creditors may request in order to agree to regulation and thus suspend the auction. Subsequently, the long-term repayment plan is formed as follows: Up to 240 instalments for outstanding debts to the State and the Social Security Bodies for non-performing loans to banks and services may be settled in up to: Procedure The application shall be assessed by the financial institutions submitting a proposal to restructure debts through the platform. If the debtor agrees to the debt restructuring agreement, it shall be binding on all creditors. Settlement of debts shall be completed by payment of all instalments to each creditor. It is noted that if the debtor delays 3 instalments or 3%, the total amount due in accordance with the arrangement of each creditor may terminate the arrangement resulting in the loss of the arrangement with respect to the creditor involved in the revival of the claims prior to the restructuring contract, deducted of any amounts paid under the arrangement. These requirements shall become due and immediately required.