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Over-Indebted Households

Over-Indebted Households

Our company is specialized in Katselis’ Law (3869/2010) which concerns over-indebted individuals and has had a variety of successful judgments that cleared the debts of borrowers and settled them.

Basic issues of this law. Who does it concern?

All individuals come under this law, such as consumers and independent contractors but not traders. It particularly concerns employed people (private employees and public officers), housekeepers, earners, unemployed people and independent contractors (who aren’t traders). Small traders can also be settled by this law, under certain circumstances.

Finally, whoever was a trader in the past can come under the law, only if they stopped trading or undertaking other economic action, without being able to pay back their debts.

Which debts does it concern?

Every debt, wherever it may have come from. The ones which can’t be settled are the following:

  1. Debts undertaken from the debtor the year before the submission of the application to the Magistrate’s Court. It doesn’t concern the settlement of loans.
  2. Debts coming from malicious act (for instance judgment for compensation because of pain and suffering or emotional distress).
  3. Administrative fines (traffic police, Tax Authority etc), penalties (Criminal Court)

Which debtors can be settled?

When they have become permanently unable to pay overdue monetary debts without deception. The debtor is required to produce within five working days of the filing of the application to the County Court a declaration stating the transfer of real estate rights that he has made over the last three years prior to the filing of the application and the truth of the total asset of the situation.
The borrower can use the law to settle debt and receive exemption only once in his life.


What is the process of becoming subordinate to the Law?

1. The borrower has the right at any time to appeal more directly to the County Court of residence by submitting such a request to determine a hearing date. The date of the trial in accordance with the new provisions may not be more than 6 months from the filing of the application. In its application the borrower must indicate the wealth of himself and his wife, all kinds of income, creditors and requirements, any real rights on real estate transfers in the last three years and any debt remission.
2. By submitting the application the day of ratification of the question of compromise is defined, if requested, within two months after the deposit, when examined before the magistrate the possibility of the Parties. In the event that no agreement is reached, the Magistrate decides on the issue of an interim injunction, which has as its object the preservation of the legal and factual situation of the debtor’s property, the protection of his property, the suspension of the prosecution measures against him, the cessation of any deduction from his salary or pension, but also the definition of monthly installments to be paid to creditors until a final decision on the application is made, always taking into account the debtor’s living needs and his / her family.
3. Discussion of the application in Magistrates Court to include in the regulation.

What do I do from the filing of the application? Do I pay my loans?
The law obliges the borrower to pay to his creditors an amount equal to 10% of the last updated installment of his loans until the day of the validation of the preliminary ruling or the issue of an interim injunction. If, of course, someone is unemployed, that means he can not pay any amount. His property in any case, if the request for an interim injunction for the protection of his / her home is admitted, is not jeopardized.

What will happen in Court?
The process is usually short and specific things are being considered. The main issue is to show the indefinite weakness of the debtor, his living needs of this and his family and assets with their commercial values in order for the judge to judge what the debtor can and must pay.

What will I finally have to pay when the decision comes to save my home and get rid of the rest of my debts?
It always depends on the case and the particular circumstances. No case is the same as the other. But there is a general framework within which we can guess what the Court will judge. This depends on the amount of borrowing, the commercial value of the borrower’s home and other assets.
The main three cases are:
A. Over-indebted with a main housing
The borrower will pay monthly for 3-5 years what is left over from his income. When the 3-5 year period is finished another obligation begins concerning the house exclusively. Its duration is defined by the term of the contract with the bank up to a maximum of 35 years and the one to be repaid is up to 80% of the target value of its main residence (to be amended by a new ministerial decision).

B. Over-indebted / small-amount indebtor without assets
A) if he does not have real estate
B) its assets do not exceed EUR 1000;
C) the amount of the debts shall not exceed EUR 20 000
D) all income is zero and
E) is cooperative according to the code of conduct of the banks, then the court may discharge him temporarily completely.

C. Over-indebted with a house and a cottage or field
Since the settlement of the repayment of the principal value of the principal dwelling as described above is not fully satisfied by the creditors, then the Court will determine whether the second house or land has a commercial value and can be liquidated if a significant amount of the liquidation and, of course, will give rise to buying interest. Since it is of low value it will not be liquidated, but if its value is great then the court will liquidate it and the amount that will be deducted from the total debt. The court will then do the analysis in case A if there is another amount of the total debt. Note: if the borrower’s debts are less than 80% of the house’s objective value, it does not mean he will pay more money than he owes. However, he will pay his entire debt for a duration not exceeding 40 years (3-5 years + 35 years for the home).

How is the rescue interest rate fixed for the main residence?
Settlement of the debt for the rescue of the main residence of up to 35 years shall be at an interest rate not exceeding that of the current debt or the average interest rate on a floating rate mortgage loan valid according to the statistical bulletin of the Bank of Greece in the last month for which a reference rate adjusted by reference to the European Central Bank’s Main refinancing operations or, in the case of a fixed interest rate fixation, the average mortgage rate for a period proportionate of that indicated by Bank of Greece’s statistical bulletin and without interest.

If someone is unemployed and unable to pay any amount?
The court will issue an interim decision fixing zero payments and a new trial date will be fixed to review the case. If the applicant has found work until then he will set a new monthly installment for the remainder of the adjustment.
If, however, he remains unemployed, he will wholly dispose of it if he does not have a home in his name, and if he has, according to settled case law, they are most likely to repay 80% of the house’s objective value over a period not exceeding 35 years.

I am a guarantor of a loan and the borrower is already exempt from Katseli’s Law or simply does not pay his loan. I am in danger; Am I in charge of the loan?
If there is a guarantor on the loan, he is also responsible for the entire amount of the loan, as is the principal debtor. Therefore, in order to get rid of this loan, he must apply to the County Court for his inclusion in the Katseli law, including his own loans,

What if my application is rejected at the County Court? Should I pay the interest for the period from the date of filing my application to the rejection decision?
No, even if the application is rejected, interest does not run for the period between the deposit and the decision. Interest generation continues from the adoption of the rejection decision onwards.

My request was accepted, a decision was made with monthly payments, but after a few months I lost my job. What can I do?
If new facts arise, such as unemployment or a reduction in income, the borrower has the option to file a request for reform of the decision requesting an adjustment of the monthly installments downwards.