A whole chain of people battens on harried debtors
Every Wednesday, in town halls around the country, at auctions of property, and every Monday at bankruptcy cases in courts, properties both large and small exchange hands for a pittance. Although the vultures are the apparent rulers of what is to all intents and purposes a legal system, behind them is a powerful mechanism that rests on inadequate laws and a tolerant state, and is fed by compound interest rates. The system involves people as varied as the country’s economic powers-that-be, judicial officials, lawyers and notaries public. Although the extent of the problem was until recently quite limited – affecting only a very small number of people – in the immediate future, it is at risk of getting completely out of control. According to an unofficial survey by the Debtors’ Union of Greece, in the 1970s, 2,840 properties were auctioned off by banks, in the 1980s about 31,000, leaping to over 250,000 in the 1990s. Loans and credit cards Court records contain a growing number of references to foreclosures on homes because of owners’ failure to pay installments on loans taken out since 2000. Credit card companies are seizing homes for debts of only 170 or 250 euros. Consider the following case of a woman who had taken out a consumer loan for 2,900 euros (1 million drachmas) on which she still owed 733 euros (250,000 drachmas). Within 15 months, the bank had raised the debt to 5,000 euros (1.7 million drachmas) and is now refusing to negotiate a settlement. The vultures, in cooperation with a bank employee, have already found a prospective buyer. Moreover, the auction company – that is, companies that engage in presales (!) of properties – have already placed their advertisements in the press. There is also an increasing number of bankruptcies of small and medium-sized businesses. Property owned by a popular clothing firm that until a few months ago had large retail outlets on Stadiou Street is about to come under the hammer. There are many who dream of the moment when – as one vulture put it – jewelry shops worth 600,000 to 900,000 euros (over 200 and 300 million drachmas) will be auctioned off for 60,000 euros (over 20 million drachmas). It is farmers, however, who find themselves the worst off. Fields, homes, stables and stock are being seized all too frequently, since banks have seized over half the properties owned by farmers. Lawyers such as Sefis Anastasakos have stepped into the breach. «I do nothing more than draft annulment or postponement orders on auctions by banks. The law says that banks must provide copies of the debtors’ loan payment record so that they know how much they owe. According to legislative provisions, if a branch does not provide the debtor with the documents, he or she can report the fact to the Bank of Greece which can fine the branch 15,000 euros (5 million drachmas.) Until now, I have dealt with at least 2,000 allegations, and fines have been imposed in 300 cases. The remainder are still pending or have been delayed,» said Anastasakos. «The debtor asks for the documents and asks to be covered by the provisions of the law on the cancellation of compound interest. While the bank has the right to reply within three months of the request being lodged, auction procedures are speeded up. So I go to court and I say: ‘For goodness sake, Your Honor. I have here the request for the cancellation of compound interest and I am asking for the loan payment record in order to check the amount owed.» Permanent debt At auctions, the banks bring down the prices, with the result that fixed or liquid assets are sold at a much lower price than their real value and the debtor, having lost everything, remains indebted. Banks – an old banking hand pointed out – could instead give debtors time to sell their property themselves at a reasonable price. Moreover, the State – which has called a partial halt to the scandalous rise of compound interest rates – could check the creeping tendency of banks to arbitrarily impose these rates. The banks or individual loan sharks that place property under the hammer are not the only problem. Officials of the judicial system are those who arbitrate debtors’ payments and issue the auction schedule. They are able to facilitate the debtors in many ways – for a price. A typical way is by not being able to «find» the debtor, thereby delaying the auction. At the same time, the official sets the next auction date soon afterward, amassing «tokens of gratitude» at ever shorter intervals. In bankruptcies, the lawyer, in cooperation with the court official, evaluates the total property owned by the debtor. It is a question on what basis they estimate the worth of complex machinery, for example. And sometimes, the technician called in for a valuation is himself a vulture. The notary public for auctions is appointed by the court official. When the property is auctioned, by law the new owner has to pay the amount owed within specific time limits. However, while the law provides for payment in full, the new owner is often allowed to pay in installments.
