1. Introducing and Implementing a Law on Debt Adjustment in Greece at a time of economic crisis Melina Mouzouraki, Dublin 2012

2. Who may apply?  All individuals – except traders  Individuals who are permanent insolvent  Individuals who are not in the situation of insolvency on purpose (fraudulently)‏

3. Which debts?  All kind of debts to credit institutions (due or not due, secured or not secured, professional, mortgage or any other debt)‏  All debts to any third person EXCEPT  Debts from claims related to wrongful acts  Administrative fines, penal fines  All kind of taxes to the State  Debts related to public insurance

4. Discharge Period  48 months after issuance of the judgment  Paying according to income- Rejection I bn case of 4 months delay in payments  No standard budget- Debtor allowed to keep income to cover family basic needs for a living.  Zero payments in cases of unemployment, severe health problems, non-existent income- Periodical review of the situation

5. EXEMPTION FROM LIQUIDATION OF PRIMARY RESIDENCE  Extra Payment Plan of a duration of up to 20 years.  Pay an amount of debt equal to 85% of the value of the house and exempt the house from liquidation.  Valid from dwellings of a value up to 300.000 euros (varying according to the personal situation of the debtor)‏

6. PROCEDURE  Extra- judicial debt payment plan  If failed, filing in court of the petition  Second attempt to reach an agreement- within 2 months after filing-Creditors with a debt of 51% of the total debt, and all creditors with secured debt, have to agree.  If failed, hearing.  If petition accepted, payments for 4 years according to judgment.  Debt relief pronounced by the court after execution of 4 years payment plan.

7. EXAMPLES FROM SPECIFIC CASES  Profession : Retired  Personal status : 65, married, two grown-up children, one, 33, unemployed, living with the parents  Income : 1.273 euros (pension) Spouse no income.  Assets : two cars from 1999 and 2002  Total debt : 122.345 euros (to 8 banks)‏  Judgment : To pay 500 euros per month. Keep an income of 773 euros (48 months). Total of 24.000 euros. Relief from the rest.

8. Costs  No fee to pay when filing  No judicial cost to pay, even in case of rejection of the petction  Representation in court by a lawyer not compulsory  But- in practice considerable fees for legal counselling and case specific costs

9. Example of a debtor with a dwelling Retired, Single, 62 Income : 968 euros Total debt : 135.000 euros (to 6 banks)‏ Dwelling : An apartment of 52 s.m.(1981). Estimated value by the court :73.000 euros. To pay 400 euros per month to all creditors, evenly distributed, for 48 months. To pay for another 15 years (180 instalments), the sum of 62.050 euros (85% of the value of the house) Period of “grace”

10. Evaluation of the law  1. An important tool to tackle over- indebtedness  2. Raised bilateral debt adjustment plansBetter plans, more suitable to the real payment capacity of the debtors  3. Beneficial to credit institutions, too, as it prevents from an horizontal haircut and focuses on case-specific circumstances.  Protection of the dwelling

11. What should the debtor include in the petition?  All debtor's assets  All kind of income of the debtor  All kind of income of his/her spouse  All creditors and all their claims broken down by principal, interest and costs.  A debt settlement plan.

12. Statistical Data  12.000 extra-judicial payment plan proposals  7.800 petitions filed within 2011  More than 1000 judgments issued  60% of petitions accepted  40% of petitions rejected, but mostly on procedural reasons  60% of petitions filed by debtors who asked the exemption of their dwelling from liquidation

13. The way forward  Need for professional independent debt counselling  Need for licensing and supervision of these professionals  Need to provide free debt and legal advice and representation in court  Need to ameliorate infrastructure in courts  Need to sensitize and train law practitioners and judges  Need to monitor enforcement of the law, defend it and amend, when necessary

14. Evaluation of the law  An important tool to tackle over- indebtedness  Positive effect also to other debtors : better suited adjustment plans proposed by the banks  Beneficial to the credit institutions : law orientated to a case-specific debt relief and not to an horizontal haircut.  Protection of the debtor' s dwelling.