Facilitating debt arrangement
A bill by the Ministry of National Economy and Finance that is expected to be released on Thursday will provide greater flexibility to debt management companies for bigger “haircuts” in the debt arrangements of the extrajudicial mechanism, as well as fines for omissions from reliable debtors.
In the matter of the out-of-court mechanism, the possibility will be given for larger write-offs of loans, disconnecting the amount that the creditor can recover from the value of the property. Based on what is currently in effect, the amount of the recovery cannot fall short of the commercial value of the immovable property available to the debtor, a condition that acts as a brake on the arrangements made through the extrajudicial mechanism. The potential for larger debt write-offs is also expected to act as an incentive for borrowers to comply.
The omnibus bill will further include regulations allowing non-banking institutions to grant, in addition to consumer and mortgage loans, with the aim of opening up competition in this market, but also the possibility of investment funds to refinance red mortgage or business loans in order to more effectively address the issue of private debt.
