A new record high was recorded in January in the launch of new applications on the platform of the out-of-court debt settlement mechanism with more than 5,000 applications, according to data released by the Ministry of National Economy and Finance last week.

But what are the estimates for the reasons that led to the increase in the number of applications? Will the upward trend continue?

As she mentions, in her statements to APE-MBE, the general secretary of the Financial Sector & Private Debt Management, Theoni Alambasis, the latest figures reflect a monthly record of new applications as in the last month alone (January 2024) 5,031 new applications were launched on the platform of the extrajudicial mechanism. In total, the successful arrangements of debts amount to 13,101, which correspond to 4.8 billion euros of initial debts and we should add that in the last half of the year they are achieved by almost 1000 settings / month.

At these rates, in a realistic scenario we are expecting arrangements corresponding to more than 2 billion euros within six months. The constantly growing interest of debtors in the out-of-court mechanism, which continues to work better and better every month, proves its dynamics. These results come and are reinforced after a series of legislative improvements, such as the obligation to justify the application from creditors, the additional up to 28% “haircut” of the debt in loans with collateral as well as the definition of the interest rate at 3% fixed for 3 years for all debt settlements to Banks and receivables management companies, while for the State a fixed 3% has been established for the entire duration of the settlement, says Ms. Alambasis.

The increase in the number of debtors joining the Extrajudicial Court will continue

The general secretary estimated that the goal of including more and more debtors in the extrajudicial mechanism continues and we expect even better results. This assessment, as stated by Ms. Alambasis, is also based on tangible evidence:

– First of all, with the recent improvements, the debt restructuring proposal of the vulnerable debtors found by the platform to meet the relevant criteria, is compulsorily accepted by the Banks, the servicers and the State. So we have, from this fact, a net increase in out-of-court admissions. A second parameter that documents the estimates for an additional increase in the successful ones, is the commitment of all Servicers individually to increase the approval to 80% for the applications that are in the range of total debts up to 250,000 euros.

– Average approval rates are already high, above 70%, however the commitment that everyone follows the “8 out of 10” will raise the bar even further. And a third factor, is the steady month-on-month growth we’ve seen over the last six months, both in the initiation of applications and in final submissions. So since more applications are entering the platform, we also expect more successful “exits” (i.e. successful settings), combined with the aforementioned factors.

– The information campaign promoted by the Ministry of National Economy and Finance will actively contribute to the above, which will aim to provide detailed information to borrowers, vulnerable and non-vulnerable, about the available debt settlement tools, their rights and the provisions provided.

An improved platform of the Extrajudicial Mechanism is in force

Moreover, the improved platform of the Extrajudicial Debt Settlement Mechanism, which incorporates the recent legislative regulations of the Ministry of National Economy and Finance, came into force last week.

Through the Mechanism, debtors have the possibility to settle all their debts ensuring an automated solution and avoiding court proceedings.

But how user-friendly is the platform for all parties involved? Answering the question, Ms. Alambasis states: The entire application process on the extrajudicial debt settlement mechanism platform is fully automated for the user, while the platform environment provides instructions at each step of the application. There are detailed guides that guide the interested party from the beginning of the application to its final submission. At the same time, the frequently asked questions – answers give the appropriate directions to the difficulties that the users may face. All informational material is available on the website of the General Secretariat (www.keyd.gov.gr).

The digitization of the application process is an important achievement as we have minimized the supporting documents that the interested party needs to present to just two. In particular, these are the criminal record and the solvency certificate, and we are already launching the interconnection of the platform for the automatic extraction of the criminal record in the next period.

Users also have at their disposal and can watch the highly detailed webinar “BHIMA – BHIMA application to the out-of-court debt settlement mechanism” which is available on the General Secretariat’s YouTube channel.

In addition to the above, the users of the platform, whether they are advisers to the debtors (accountants, lawyers) or are the debtors themselves, can directly, validly and daily be served by a representative of the General Secretariat from the remote support service myEGDIX.live. gov.gr.

The service is carried out nationwide by video call or by telephone by appointment through the platform or by calling 213.212.5730.

Through this service, almost 35 thousand advisers and debtors have been served in the 13 months of its operation, while the percentage of absolute satisfaction of the served according to the evaluation of the service provided by them is impressive, which exceeds 93% at all levels of service .

In any case, let’s not forget, emphasizes the general secretary, that the algorithm needs detailed financial data in order to calculate the repayment capacity of each applicant personally, so it could not be exhausted in two simple “clicks”. However, digitization has made it much easier to complete the application, while supporting services make it accessible to any user, individual or consultant. In this direction, we are constantly working to upgrade the platform and further facilitate the application process.