Insolvency, Bankruptcy and Restructuring Practitioners

Insolvency of Physical Persons

a) Personal repayment Schemes (ΠΣΑ)

The new framework, which introduces significant changes over insolvent individuals, is directed towards:

- the avoidance of bankruptcy of a substantial number of physical persons adversely affected by the financial crisis of recent years,

- facilitating the performance of previously non-performing loans of such individuals with banking institutions.

(i) Repayment Plans by concession of both parties

Physical persons may approach Licensed Insolvency Practitioners, who in collaboration with the debtor will prepare a repayment plan, which with the consent of creditors could lead to a court order being issued to protect the debtor from creditors for a period of 95 days with possibility of extension for further periods.

Such plans, once approved by creditors, will provide a plan for the performance of the physical person’s debts. In the case where the creditors approve the plan, by special majority, the plan is approved by a competent court. Dissenting creditors will have a right to be heard before the court.

Through this mechanism, it is envisaged that natural persons’ debts are repaid and any immovable property serving as primary residence is protected, where possible

(ii) Non Consenting Repayment Plans

In the event of creditors not consenting to a repayment plan of the physical persons debts it is still possible for the court to approve a repayment plan without the consent of creditors provided:

  • the total outstanding debt of the physical person does not exceed €350.000 (including secured debts);
  • the primary residence of the physical person (of a purchase value not more that €300.000) is mortgaged in favour of at least one of the creditors;
  • the total asset value of the physical person’s remaining assets (excluding the primary residence) does not exceed €250.000;
  • the natural person is unable to pay his/her debts due to a deterioration of his financial situation as a result of events outside the debtor’s control, leading to the substantial decrease in income by at least 25%

A judicially approved non-consensual repayment plan is of course legally binding on the natural person’s creditors and the debtor himself. Guarantors of the physical person’s debts are also afforded certain concession under such repayment plans.

b) Debt Relief Order (ΔΑΟ)

Debtor who considers that it meets certain criteria provided in this law, may be relieved from loan obligations up to a maximum f Euro 25.000 provided among other criteria:

  1. The debtor is insolvent (meaning that he cannot repay all of his debts, as they fall due)
  2. The debtor is very likely to continue to be in such insolvent position for a period of one year from the date of his application
  3. The monthly net disposable income of the debtor does not exceed the amount of € 200
  4. Debtors’ assets do not exceed the amount of € 1,000, except those protected under bankruptcy proceedings

The Insolvency Service, conducts necessary examination of the application and once it confirms that all eligibility criteria are met, issues a Certificate of Approval which must receive the approval of the Court.

Once the Court approval is received the approved debts are Debtor who considers that it meets the criteria / conditions provided in this law, submits a duly completed application to the Insolvency Service.

The main criteria are the following:

Once the orders is issued, the debtor will be exempted from unsecured debt which do not exceed € 25,000, as well as any other obligations in this regard, and all interest, monetary clauses and other amounts from the date of application, become payable in respect of that debt.

The debtor is also exempted from his obligations as guarantor. Guarantor who has guaranteed the debt included in the said Order is exempted from any responsibility in this regard and in relation to any other obligations in this respect and shall enjoy the same protection as the debtor.

Creditors can file objections to the court within one year from the issue of the order. order is issued, the debtor will be exempted from unsecured debt which do not exceed € 25,000, including interest, monetary clauses and other amounts from the date of the application.

The debtor is also exempted from his obligations as guarantor.

Guarantor(s) who has guaranteed the approved debts included in the said Order is exempted from any responsibility and obligation and shall enjoy the same protection as the debtor.

Creditors may file objections to the court within one year from the issue of the Order.

For advice and information please contact

John P Poyiadjis,  

Roulla Katsounarou  

all Licensed Insolvency Practitioners.

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