Gov’t drafts plan to ease borrowers’ debt load

The government is waiting for the approval of the European Central Bank and the Bank of Greece before tabling in Parliament a draft law that provides for lifting some of the debt burden on specific categories of overindebted households, according to Deputy Development Minister Athanasios Skordas.

Speaking in Parliament on Friday, the government official made it clear that there is no question of a general haircut on loans burdening households, as such a move would result in the creation of serious new problems for the credit system and the economy in general.

“It is true that many households have been taken aback by the reduction of their incomes and are unable to respond to their loan obligations. Our objective is to focus on protecting those households that are really unable to respond to their obligations,” Skordas said in response to a question by New Democracy deputy Dimitris Kyriazidis.

He went on to describe the steps that are being planned for the short term in this direction, in adherence with the government’s pre-election pledges. He said that in the coming days the government will extend the suspension of house auctions where the property involved is the borrower’s main residence until the end of 2013. The draft law that is being processed contains an amendment to the extrajudicial compromise system the existing legislation provides for: “Instead of the joint decision by all parties that the law requires for an out-of-court settlement, that can happen with the payment of only 50 percent plus one [euro] of the debt,” said Skordas.

According to the minister, the people to benefit from this debt-lightening provision will be all the unemployed, all those with disabilities, all people with a long-term illness, those with four or more children, and any salary workers and pensioners with annual revenues below 25,000 euros who have seen their incomes slashed by at least 35 percent since January 1, 2010.

The government will also “improve the existing framework of the operation of [bad loan register] Teiresias, so as to allow banks to deal with the problems of people who may have had an isolated misfortune of any kind in a more flexible fashion.”

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