Code for the Settlement of Debts & Provision of Second Chance: Proper legislative initiative that needs improvement

HFSF Management through its letter to Christos Staikouras, Minister of Finance proposes a series of improvements and additions to the “Code of Debt Settlement & Second Chance”.

In this letter signed by A. Verykios, HFSF President of the General Council and M.
Czurda, CEO, it is pointed out that the relevant initiative is timely and, in principle,
correct, as within its framework are adopted proposals that had been submitted by
HFSF earlier in the past.

During the last decade, economy has experienced a severe financial crisis, which has
affected businesses, professionals, and many households. Although measures and
legislative initiatives were adopted from time to time, they proved to be inadequate
for the effective tackling of the problem. The pandemic of covid-19 was added to the
already aggravated situation, thus intensifying frictions within the international
economy, and magnifying a wider concern climate.

Undoubtedly, there is a need to create a unified, transparent, and automated
framework for dealing with all relevant procedures for both debtors and creditors.

In this context, the more specific proposals reached by HFSF Management, among
others, are:
• Further examination of the issue of limiting the reasonable “perimeter” of the
debtors to individuals that truly require the protection that is offered through
the mechanism for the out-of-court settlement of their debts; also, taking into
account that the out-of-court settlement procedure should involve individuals
that encounter financial difficulties, it is proposed to include as an additional
criterion for the selection of the beneficiaries the significant, exceeding a
certain threshold, reduction of the family income within a specified period of
time (e.g 3 or 6 months)
• The borrower’s resource to the out-of-court settlement mechanism should not
by itself constitute an indicator or a criterion for a possible Unlikely to Pay
characterization and for the reclassification of the borrower
• Prior to the implementation of the law, consideration should be given to the
various prerequisites of the law, so that the actual and operational date of
commencement of the application of the law is not unduly delayed. 

HFSF, in pursuit of its objective to contribute to the maintenance of the stability of the Greek banking system for the sake of public interest, will continue to support any initiative and action serving this purpose.

Press Release