From the entry into force of Law 3869/2010 until its recent repeal, thousands of borrowers attempted to join its beneficial provisions. The magnitude of the economic crisis and its long duration ultimately led more than initially expected to be unable to pay their loans and ultimately to an increase in cases in the country's Magistrates' Courts. Ultimately, Law 3869/2010 (Overindebted Households) monopolized interest for many years as the bankruptcy procedure for natural persons and not only.
With its recent amendment by Law 4745/2020, all pending cases in the Justices of the Peace will be discussed in 2021 and 2022, which in many cases in the Attica basin had been determined even after 2030. In this new procedure, there is no examination of a witness or the borrower himself in court, in fact, a decision is issued from the documents and written allegations submitted in the file without the presence in court of the borrower-debtor and his lawyer.
The above will not give many people the opportunity to present, as they would like and as would be necessary for the proper assessment of the case, several of their claims, while the issuance of the last decisions through the above procedure will mark the end of Law 3869/2010 in the Magistrates' Courts, in addition to the renegotiations that may be decided with the decision for a possible redetermination of the monthly payments.
It is therefore expected that in the near future many borrower applications will be rejected by the Magistrates' Courts or accepted on terms that are unfavorable to the borrower or on terms that will be impossible for him to implement, such as setting high installments.
It will be observed, in view of the often messy redefinition of applications under Law 4745/2020, that decisions are issued in related cases with joint borrowing (e.g. spouses) by a different Magistrate's Court, without having assessed what has been decided in the other decision of the co-debtor or guarantor and therefore are unfavorable to the borrower.
Given the repeal of Law 3869/2010 and its non-replacement by a similar law protecting the debtor-borrower, in combination with the opening of auctions and seizure reports that are increasingly being communicated by debt management companies (funds), it is necessary for the debtor-borrower to exhaust all the rights granted to him by Law 3869/2010. The rejection of an application at first instance or the decision with terms that the borrower cannot apply is most often necessary to be appealed for different reasons per case.
The appeal should, for many reasons, be submitted immediately, but in any case it must be submitted within 30 days of the service of the decision of the Court of Justice or, if it has not been served, within 2 years of the publication of the decision. The competent court for the hearing of the appeal is the Single-Member Court of First Instance, i.e. in Attica the Court of First Instance of Athens or Piraeus.
In many cases, the Court of Justice has not properly assessed the case or has exhausted its strictness towards the arrangement requested by the debtor. The appeal analyzes the reasons why the first-instance decision was wrong and the Court of Appeal re-examines the case. The most common reasons for rejecting applications are:
A) the commercial status that the borrower held at the time of his/her application to Law 3869/2010 or the time of cessation of payment of installments to the Banks. In addition to the clear cases of commercial activity, there were many professions that concerned the case law regarding whether these confer commercial status or not to the borrower. Also, in many of them it was necessary to analyze the context or the manner in which they were practiced in order to decide whether or not they were commercial in nature. The Court of Appeal is likely to rule differently for many activities, as has often happened with contradictory decisions being issued by the Courts of the Peace. Furthermore, it is interesting to note that applications from former traders were rejected, as it was considered that at the time of cessation of loan payments they still held commercial status. In many cases, however, this cessation of payments was not permanent and general as required by law, but the payment of installments was made with delay or in parts, nevertheless, there were applications that were rejected without proving the continuous and permanent inability, and this was perhaps because the evidence was not presented clearly in the first instance or was not assessed correctly, and perhaps also because the documents proving it were not presented. In other cases where the commercial activity had stopped, but the formal cessation had not been made at the Tax Office or it was delayed due to pending matters, which was the most frequent phenomenon, there was a tendency to reject the borrower's application, because it was considered that the time of loss of commercial status was the time of cessation of operations at the tax office, although the time of loss of commercial activity should be considered the time when commercial transactions actually cease to be carried out. Therefore, in the above cases and in many more, the commercial capacity was not assessed correctly in the first instance and is being examined again in the appeal trial.
B) fraud at the time of taking out the loans or subsequently by taking on new loan obligations or additional acts or unwise borrowing, otherwise over-borrowing. They constitute the majority of the reasons for rejecting applications under Law 3869/2010. The Magistrates' Courts often judge that the borrower exceeded the borrowing limit to which he should have been led based on his financial data, his age and the expectations of economic development that he could have in the future. Other times it is judged that he had not made proper planning on how to repay the loans or in the process did not discern the difficulties and continued to take on obligations or modify the already existing ones. However, in many cases, the Magistrates' Courts have not properly assessed the circumstances that led the borrower to this point, the uncontrollable factors in his life, the extent of the financial disaster he suffered from the economic crisis, his family situation and the changes in it, other unforeseen events in his daily life, any health problems, the increase in obligations to the state and general accuracy, the lack of information of the borrowers, the insistence of the Banks in selling products, their possible complicity in this, the failure to comply with the lending rules, the indirect acceptance by the Banks or the risk they assumed in the possibility that the debt could not be repaid in the future, the high interest rates that can inflate a debt that in reality when it was assumed was much smaller, the refusal of the Banks in the previous decade to make arrangements to facilitate the borrower and continue to pay, something that has been happening in recent years with the emergence of funds, and many others. It is customary with some decisions not to forgive the relative, usually a spouse or children, for providing a guarantee for a loan, as he did not have high incomes, but it also worked as an aid because it was a requirement of the Banks for the signature of a guarantor to take out a loan. Other borrowers found themselves owing amounts that they never used themselves, simply because they guaranteed a loan for their relative and ultimately failed to fall under Law 3869/2010 due to fraud that was judged in the first instance. In the appeal trial, all the allegations that refute the reason why the Court of Justice concluded that the loan was fraudulent or unwise are developed in detail, allegations that, due to the large range of cases, were often not possible to develop at first instance or were raised but not assessed correctly.
C) the borrower's lack of the condition of inability to pay the loans. Many times it is judged in the first instance that the debtor-borrower at the time he filed his application under the Katseli Law could continue to pay the loans from his income or that he rushed to take advantage of the law to facilitate the repayment of the loans, even that because he had not stopped paying the loans for a long time he had not found himself in a state of permanent inability, even if the course proves it. However, the detailed analysis of his financial data of that period and the presentation of the necessary evidence will show that he had no other choice than to fall under Law 3869/2010 and was rightly led there. As mentioned in this article, you can browse the selection of available smartphone deals and top brands and explore the service plans that best suit your needs.
Furthermore, the appeal is also necessary in cases where the application was accepted by the Court of Peace, but under terms unfavorable to the debtor, such as a) high installments due to a poor assessment of his income, living needs and other obligations, b) the sale of his assets, c) the incorrect assessment of the value of the main residence and consequently the regulation with high installments to protect it, d) the distribution of installments among creditors, etc.
Therefore, if the borrower's reasons for appeal are valid and true, the second-instance court re-examines the case on its merits, reassesses the evidence, the creditors' claims, the living needs of the debtor and his family, the determination of the monthly installments, the exclusion of the main residence, the non-liquidation of other assets, and the other individual terms.
In addition to the above, the appeal prevents the decision from becoming final, which, if it does, leaves the borrower-debtor completely exposed and is very likely to quickly find himself faced with the loss of his property and his only main residence. In the period until the hearing of the appeal, which due to the volume of cases is delayed for several years, the borrower can negotiate with the funds, which now manage most loans, the settlement of his debts and achieve a significant haircut and time extension. His stay in law 3869/2010 with the filing of an appeal and therefore the non-finality of the case will give him enough time to seek a solution but also negotiating capacity that he will not have in the event that he is placed outside the law with finality.
If in any case, in the interval between the submission and the discussion of the appeal, a risk arises for the borrower's assets, interim measures may be requested to protect his property from sale, commonly the suspension of the enforcement procedure that is being expedited by a bank or fund, an option that the borrower does not have if he has not filed an appeal.
Therefore, the lack of another bankruptcy law with the beneficial provisions provided by Law 3869/2010 requires the continuation of the procedure even if it was initially unsuccessful, as the second instance gives the opportunity to reassess what was probably not assessed correctly until then and for the borrower to achieve the settlement of his loans under the best possible conditions.
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