Changes to its basic conditions out-of-court settlementwhich will lead to write off debts for more debtors, they are at the negotiating table between Department of Finance, Banks and Funds. The goal is an existing condition according to which, after settlement, the amount that the creditor (bank or fund) will reimburse cannot be less than its commercial value. property. This term is a brake on agreements concluded through an out-of-court mechanism.

Thus, while a significant percentage of 41% of arrangements also have debt haircuts, a high percentage of arrangements do not include write-offs. debtsbut only relief in their repayment. This element is expected to deter debtors, and changing the commercial value limit on which the write-off rate is also determined would be a step that would make regulation more convenient. As can be seen from his data extrajudicial mechanism54% of the total debt – that’s 3.6 billion euros – that was approved in the context of the out-of-court mechanism has less than 50% of the debt secured and therefore the flexibility of the measure will increase the level of acceptance by applicants’ stakeholders, which, according to the platform, in currently stands at 61%.

The reason is that even auctions included the possibility of reducing initially to 80% and gradually to 65% of the original offer price if there is no interest in the initial price at which the property is put up for auction. Thus, it is proposed to expand this possibility through an algorithm, if not up to 65%, then close to 80% or, alternatively, by bringing the commercial value, on the basis of which the debts will be settled, with the objective price of the property, i.e. the one on which it is calculated LIGHT.

According to “K”, this measure will be seen as part of new improvements to the out-of-court mechanism that will be launched by the new government after the June 25 elections. In this context, measures to improve debt repayment conditions will also be considered, such as, for example. the opportunity for the debtor to repay part of the debt at the expense of the advance by reaching a better agreement. This possibility is estimated to limit the non-execution rate of the out-of-court mechanism, which currently stands at 19%. It is estimated that the percentage of these defaults is artificial, as some debtors resort to this solution through bilateral, that is, out of court mechanism, arrangements with servicers who can provide solutions with more flexibility.

A new package of engine improvements is being prepared.

This will be the third package of improvements to the out-of-court mechanism, designed to make this tool more effective and secure as the main means of resolving debt to both the state and financial institutions.

The need for significant regulation to limit the amount of bad loans that have left the banks but remained in the economy was also pointed out by the Central Bank of Greece in a recent financial stability report, which notes that “moving them out of the credit system does not mean the elimination of debt from the economy” . “The debt remains,” she notes. TTE and its management has now been handed over to management companies that have taken out loans worth 90.5 billion euros.

The number of applications has doubled in the last two months

Recent legislative amendments passed in March have increased the number of settlements reached through the out-of-court mechanism platform, and according to the latest available data, over the past two months, settlements have nearly doubled from an average of 2,200 in previous months to 5,109 and 4,110 in March and April.

Main improvements:

• Expanding the scope of the out-of-court order to include debtors with only one debt (over €10,000).

• Possibility of subscribing debts to third parties collected by the tax administration (eg debts to municipalities that are certified and collected through AADE).

• The ability of the debtor to demand – under certain conditions – the retention of an informed or already settled and informed debt in an offer of settlement through out-of-court settlement.

To date, 10,300 debt applications totaling €3.8 billion have been evaluated through the platform, of which €2.1 billion have been accepted by debtors. Another 7,200 applications totaling €4.7 billion are in the final stages of submission and negotiation, with another 16,600 debt applications totaling 9.6 billion are at the stage of initial submission and extraction of the necessary data from the platform. According to the same data:

• 74% (13.4 billion) of debt falls on individuals.

• Most of the debt (76%) falls on banks and funds.

• Debts over EUR 1 million account for 60% (10.9 billion) of total debt and account for 10% (3,900) of applications.

• 91% (16.4 billion) of total overdue or canceled debt.

• The average write-off rate for government debt is 22.2% and for banks or funds 32.3%, while 41% of agreements (629 million) have a write-off rate of over 30%.