“Rain” bankruptcy filingson the basis of Law 4818/2021, to register individuals, whether or not engaged in commercial activities, who are unable to pay their debts to banks and social security funds. The legal framework for a “second chance” gives, under certain conditions, an opportunity for individuals to get rid of their debts and within three years or even one year (if they have real estate) start a new life, be active again, business.

Debt cancellation seems like a strong lure, with about 1,400 individuals taking advantage of the special provisions in 2022. It is estimated that there were about six applications per business day last year.

“Thanks to bankruptcy and the release of an individual from his debts, the debtor is given a second chance to resume activities, once again taking over business activity. At the same time, the national economy is served, because otherwise the debtor will remain trapped in a permanent debt position, from which he will not be able to get out and will resort to the shadow economy. This was reported to “K” by the lawyer Vangelis Tranoris.. But what are the necessary conditions?

In so-called petty bankruptcies, in order for the debtor to become bankrupt, his total assets (movable property, real estate, etc.) must not exceed the amount of 350,000 euros. As Mr. Tranoris explains, he must still be in default, that is, be unable to pay his overdue obligations to the state, social security authorities or financial institutions in the amount of at least 60% of the total amount of overdue obligations. The suspension of payments must be for a period of at least six months, and the default must exceed 30,000 euros. If, within 30 days from the date of filing the application (in the electronic register of solvency), no interference is made with respect to it or an application is submitted regarding only the appointment of a bankruptcy trustee, the bankruptcy court makes a decision on declaring the debtor in bankruptcy.

“According to a review of court practice, most published decisions accept filed bankruptcy applications,” notes Mr. Tranoris. The attractiveness of the second chance regime is explained by the fact that the debtor – an individual is completely released from the balance of the debt remaining outstanding after the completion of the bankruptcy procedure, under the only condition – after three years from the date of bankruptcy. bankruptcy was declared. However, even if the debtor does not join the agreements due to lack of assets, its registration in the electronic solvency register (as not declared bankrupt) is enough to get rid of debts and resume business activities after three years.

The law allows individuals to get rid of their debts and start a new life within three or one year.

In addition, “the three-year term is reduced to one year if it is a debtor whose main residence or other important fixed assets are included in the bankruptcy estate, which exceed in value 10% of its total liabilities and their minimum value is not less than 100,000 euros”, – emphasizes lawyer Vangelis Tranoris.

In practice, if an individual owes 300,000 euros and has assets of 90,000 euros, then they are sold to satisfy the claims of creditors, and the remaining amount (210,000 euros) is written off. On the contrary, if the debtor owes 150,000 euros and has property worth 350,000 euros, it is sold to repay the debt to creditors, and the rest of the property remains in the ownership of the natural person.

First residence

With regard to primary residence protection, it is only available to individuals who are vulnerable debtors and meet some of the three conditions. They have been declared bankrupt, a forced collection process is underway (at the expense of the main place of residence) or a restructuring agreement has been drawn up (between the debtor and the social security authority).

In any case, before the expiration of three years or one year (if the debtor has real estate), an individual cannot resume entrepreneurial activity, since he is in a state of bankruptcy, having the opportunity to ensure a minimum guaranteed income that is not subject to disposal.

Businesses closed, debts remained…

What are the characteristics of individuals for whom bankruptcy is the only option? For the most part, debtors looking for a second chance had sole proprietorships that went out of business a few years ago, which led to the accumulation of debts to the state, banks and insurance funds.

For example, the head of a public building cleaning company that went out of business in 2013 filed for bankruptcy because she had been unemployed for the past few years and her husband’s income was very low. He has accumulated more than 310,000 euros of debt related to housing, personal and business loans and credit cards, and also owns real estate and a 50% indivisible share in land, the value of which is below all debts.

In another case, a family business selling silverware, with a significant number of branches in and outside Attica, collapsed in 2009 due to the possibility of credit. My current over-indebtedness arose from an attempt to save two companies, given that all my debts came solely from the provision of my guarantees for perpetual business loans, which the two companies in which I participated had to resort to. an individual declares in a bankruptcy petition – a former entrepreneur who owes about 560,000 euros to the state, banks and insurance funds.

A private worker who owes more than €110,000 is also filing for bankruptcy, part of which was created due to his involvement as a general partner in the business.