The time has come, when people with excessive debts to banks and other financial institutions will be able to declare bankruptcy of taxable households under the new law of the Ministry of Economy and Development. From the first of September everyone will be eligible for a grace period of four years during which people will be able to defer their payments without risks for the mortgaged property (if it comes to mortgage credit). Over 150,000 citizens will be able to take advantage of the new law to settle their debts according to data provided by the Ministry.
“The lack of responsibility (concerning the banks) in lending and the lack of consumer culture, formed an artificial credit balloon in recent years that has burst after the outbreak of the crisis in late 2008,” said the Minister of Economy, Development and Merchant Marine Louke Katseli at a press conference presenting the new law, which will come into effect from the first of September this year.
All citizens (except traders) of proven persistent inability to pay their credit obligations and who are in danger of seizure of movable and immovable property are eligible to settlement. They may own of only one property and when the bankruptcy procedure starts, these citizens will be protected against seizures. Tax valuation of the property they own may not exceed € 300,000.
The first step of the procedure to be followed is the amicable agreement. Citizens, who want to ease the payment of their obligations, should try to renegotiate with the bank or financial institution they are indebted to. If no consensus is reached, people can submit a request in court. It will judge within three months the minimum monthly amount that citizens will have to pay for their obligations in accordance with the minimum level of the living standards in the country.
After the settlement of debts becomes operational, citizens will have to cover 85% of the tax value of their property within 20 years. Thus, if a citizen has a debt of € 300,000 and a property of € 100,000 tax value, he/she is obliged to cover € 85,000 for 20 years after the four-year grace period. The outstanding € 300 000 will be remitted. After this four-year period, the citizens’ names enter a list of bankrupts for another three years and they will not be allowed to develop a commercial or other business activity.