ECONOMY

Debt settlement platform to start operating in March

debt-settlement-platform-to-start-operating-in-march

March should see the launch of a new mechanism for the out-of-court settlement of debts by individuals, whether they enjoy the provisions of the so-called Katseli law or not, via a special platform that is currently under preparation.

The main incentive being offered for inclusion in the mechanism is the rapid settlement of debts, including a possible state subsidy of installments. This applies to taxpayers who have been granted protection for their main residence under the Katseli law – which expired last Monday but has been extended for another two months – as well as to those who are struggling to pay off their debts but have not applied for protection.

The model being applied is similar to the mechanism currently being used for indebted businesses and freelance professionals through the platform at the Special Secretariat for Private Debt Management.

The government’s objective in launching the new platform, which will be run by the same secretariat, is to give taxpayers the option of arranging their arrears through standardized solutions that may also include a partial forgiveness (“haircut”) of their debts. The main difference with the original out-of-court settlement mechanism is that there will be no conditions for inclusion in the mechanism, as is the case with companies and self-employed professionals.

However the settlement to be proposed to individual debtors will be based on strict criteria, such as their income and real estate properties. These are the same criteria as those used by courts for determining the course of a debt settlement – a process that is much more time-consuming – but the new platform will offer standardized settlement solutions, instead of relying on the approach and decision of each court.

This initiative is aimed at clearing a huge backlog of applications for protection by the law named after former economy minister Louka Katseli, and provides for the state to subsidize part or all of each installment due by debtors who are proven to be unable to fulfill their obligations. The government has set aside 50 million euros for 2019 to this end.