ECONOMY
Changes to debt settlement

The Ministry of Finance, banks and funds are discussing changes to the basic terms of the out-of-court settlement, which will lead to the cancellation of debts for more debtors.

The focus is on the existing term that after the settlement the amount that the creditor (bank or fund) will recover cannot be less than the commercial value of the property. The term hampers the arrangements made through the out-of-court mechanism. Therefore, while there is a significant rate of 41% of the arrangements that also have a debt haircut, a large share of the arrangements do not include debt cancellation, but only facilitate their repayment.

This element is believed to discourage debtors, and the change in the limit of the commercial value of the property, on the basis of which the write-off rate is also determined, will be a step that will make the regulation friendlier.

As it appears from the data of the out-of-court mechanism, 54% of the total debts – i.e. 3.6 billion euros – that have been approved in the context of the out-of-court mechanism have less than 50% of the debt secured and therefore the flexibility of the measure will increase the acceptance rates of the arrangements by prospective stakeholders, which according to the platform data is currently at 61%.

Source: Ekathimerini.com

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