By Penelope Galliou

The decision of the Supreme Court to conduct auctions from funds in the heart of the long and informal pre-election period that the country is going through, in addition to the political confrontation it triggered, also accelerates the decisions of the government that aims to improve the extrajudicial mechanism and to protect as many borrowers as possible.

According to information, in the coming days the Ministry of Finance is expected to file an amendment which will expand the scope of the extrajudicial mechanism with the aim of covering more citizens and in this context debtors with a single debt will be able to join, as well as debts in favor of third parties that are collected by the tax administration.

The regulation in question is expected – according to the same information – to oblige the justification of non-consent to the regulatory proposal produced by the algorithm, both of the financial institutions and the debtor, and to publicly post it on the platform. At the same time, there is an intention to abolish the penalty for prepayment of debts to the State and to reduce the interest rate for their settlement.

At the same time, the decision of the Supreme Court that “ignited” the political confrontation – according to government sources – confirms the law 4354/2015, which was passed when SYRIZA was in the Government and as they emphasize “it became the reason for there to be another political speculation on the issue of private debt and auctions”. For this reason, the government side accuses Koumoundourou of populism and hypocrisy when he refers to the issue of auctions and opposes the government, as they note that this is a problem “bequeathed to us by the foreign government of the previous period”.

On the contrary, they recall a series of measures of the current ND government to deal with private debt with particular care to protect the particularly sensitive social group of the most vulnerable debtors in order to avoid forced measures, among which auctions.

The government spokesman referred in detail to the government’s initiatives on the issue, among them

In the “Hercules” program which, as he said, “effectively dealt with the problem of ‘red loans’ that we received from the previous period, from the SYRIZA government” stressing that with the program in question the “red” loans showed a big drop, in the portfolios of banks from 44% in June 2019, shrinking to below 10% in June 2022.

At the same time, the government instituted the insolvency framework which provides a number of useful tools to tackle over-indebtedness, as well as private debt on a permanent basis. According to Mr. Economou “emphasis is placed on two main pillars of this framework, the extrajudicial mechanism, but also the safeguards for the vulnerable, in order not to lose their first home or other critical assets, while at the same time it is ensured through this framework to protect those in real need and not strategic defaulters”.

The messages sent by the new out-of-court mechanism seem optimistic compared to other efforts in the past, as more than 3,320 debtors have settled debts to the State, but also to financial institutions, totaling more than 1 billion euros, making this specific tool the most successful by numbers, with results now, of the last 12 years. At the same time, banks and claims managers have made bilateral arrangements totaling 27 billion euros, i.e. 27 billion euros of debt related to non-performing loans of more than 590,000 borrowers has been settled.

Especially to support the most vulnerable borrowers, the government undertook important legislative initiatives and instituted programs to protect the particularly sensitive social group of vulnerable borrowers. In accordance with the provisions of Law 4738/2020, it is envisaged to set up a body that will act as a “refuge” for weak debtors who are led to bankruptcy, and will enable them to keep their residence.

According to the criteria of the new bankruptcy law, the Entity provided for in the law will acquire the first residence of the vulnerable debtor, after a corresponding transfer request from him, since he has either been declared bankrupt, or forced execution against him is expedited. He will be given the opportunity to re-rent his residence and avoid eviction, so that people will not live on the street. The re-leasing period can be up to 12 years and at the end of it or even earlier the debtor will be able to take back his house.

For the period until the Acquisition and Leasing Agency is fully operational, an interim program is already in place, according to which the State contributes to the installments necessary to suspend the foreclosure process that has been initiated against the debtor’s main residence or any process of sale of his residence.

In this context, the State subsidizes the monthly installment of the loan from 70 to 210 euros for a period of time that can reach up to 15 months. While it is self-evident that during this period – that is, for as long as membership in the program and support from the State lasts – all forced measures, confiscations, auctions, evictions are suspended.