In a public consultation this week the bill of the Ministry of Economic Affairs and Finance, which includes, among other things, the two new important interventions, which make it the Extrajudicial Mechanism «catalytic tool» For debtors who want to adjust The debt the banks, debt management companies (servers), tax and insurance funds (IFCAs).
These are two new measures that are coming to facilitate the regulation of private debt and concern the rescue of the first residence – first done through the electronic platform of the Extrajudicial – but also at the new debt threshold at the level of 5,000 euros, against the minimum debt amount of 10,000 euros that has been in force until now.
Through the Extrajudicial, debtors can succeed «haircut» their debt and repayment up to 240 instalments, which means lower than the monthly instalment. The exact amount of the dose is determined by the platform algorithm and takes into account the assets and income criteria.
Thus, as reported in the Ministry's RES sources, the Extrajudicial Debt Settlement Mechanism is becoming increasingly powerful «gun» in the hands of private individuals with debts to banks and public authorities, offering significant «breathing» the management of their debts.
The choice of the Extrajudicial, they add, is a solution to the regulation of private debt, especially after the series of improvements that have taken place since April last year.
The doubling of the economic criteria of vulnerable citizens and the expansion of the margin of choice of debtors, the mandatory proposal for regulation by all creditors and, in essence, the inclusion of the middle class in the Exoquitian environment, have been instrumental in making it the best solution for individuals who want to regulate their debts. As a result, it was the availability rate of applications to increase to over 80%, making it successful 8 out of 10 arrangements.
The success of the Extrajudicial Mechanism as a «Multi-tool» debt adjustment is demonstrated by the official figures: all the successful arrangements by the end of April reached 60,388 in number and relate to initial debts of EUR 18,64 billion. Of these, 6,971 successful arrangements were achieved by vulnerable debtors, and 439 concern individuals with Special Needs.
For Minister Kyriakos Pierrakakis, private debt is in itself a crucial pillar of the economy and its management is «Cohesion policy, second chance policy». As he said in his speech at the Economic Chamber of Greece last Thursday, «Behind every debt, there are people and their stories. There are businesses that fight daily to stand on the market. There are families who struggle hard to get back».
Saving the first residence and 3 other new interventions
Protection of the first residence of all debtors through an Extrajudicial Mechanism: For the first time debtors are allowed to separate their main residence from the rest of their property in order to achieve greater «haircut» and lower monthly doses. The debtors will be able to choose the protection of their first residence in exchange for the liquidation of the other assets, at the same time as the submission of the application for the regulation of their debts to the electronic platform of the Extrajudicial Mechanism.
Thus, its height «Haircut» and the monthly installment will be based on the value of the debtor's first residence. So, the dose and the dose «Haircuts» His debts will be substantially improved and will only meet the value of his housing and income.
The possibility of withdrawing a bank account is hereby established: The seizure of a debtor's bank account can now be lifted if 25% of the total debt has been repaid and the remaining obligations to the tax administration have been settled. This is a substantial step in the right direction. «breathing» to those who make an effort to meet their obligations and return to economic regularity.
Smaller debts from EUR 5,000 are included: Access to the Extrajudicial Mechanism is greatly enhanced, as it is now possible to include debtors and debtors with a total debt of EUR 5,000 or more, while to date the threshold of accession was EUR 10,000. This enlargement is considered crucial because it integrates smaller debtors into the protective and regulatory framework, who to date could not use the Mechanism.
A new possibility of setting up up up to 72 doses for old obligations shall be established: The new arrangement concerns debts that had become due until December 2023 and had not entered into a regulation until 21/4/2026. From now on, and these debts will now be eligible for up to 72 installments, provided that debts incurred after the end of 2023 have been repaid or settled.
Ministry executives, «answer» and why, as a time milestone for the debts under regulation, 31 December 2023 has been set and not 2024 or 2025.
According to them, the first has to do with the fact that over 90% of debts have been created during the crisis. From 2024 onwards a normality occurred, so the new debts should be adjusted with the fixed regulation of 24 to 48 doses. The second concerns the fact that the State receives EUR 3.2 billion from the permanent regulation of 24 instalments. If this «broken» and increasing to 72 instalments, there would be losses of around EUR 2.5 billion per year, with all that it entails to comply with the budgetary rules.
It is noted that the 72-dose arrangement operates complementaryly or alternatively with the Extrajudicial Mechanism, depending on the interest of each debtor. However, the possibility to remove part of the debt, i.e. «haircut», can only arise in the context of the Extrajudicial.
Source: RES-APA
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