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Greece writes off debts to state and banks up to €20,000

Greece will write off debts up to 20,000 euro to tax office, insurance funds but also consumer loans and credit cards to the banks. The measure targets the debt relief of allegedly some 35,000 people and the criteria are very strict: absolute poverty, not possession of property, no income at all, bank deposits up to 1,000 euro and a 18-month supervision time to check if the economic situation of debtors remains ‘unchangeable’.

According to daily Ethnos, the Finance Ministry regulation provides that the debtors first apply to district courts that have to rule whether the applicant is eligible to see his debts written-off.

In order to benefit form the regulation the debtors must have zero income and not be in possession of any property.

Specifically the steps for eligibility are:

1) On the day of application the debtor must not have in possession any immovable property and may not have taken an act of disposal of real estate during the last three years before submitting the application.
2) Debtor’s assets like deposits at the bank where debtor is account holder or co-holder should not exceed 1,000 euros.
3) The debts included in the application constitute all debtor’s obligations.
4) The amount of debts not exceeding 20,000 euros including interest, fees and surcharges.
5) Any income throughout the previous year before the date of application and ratification must have been “zero”.

6) there are no other creditors.

7) the debtor is considered as “cooperating” under the Code of Conduct of the banks.

The regulation refers to debts to the state (taxes) and insurance funds, debts to municipalities, and debts to the banks due to “consumer loans” and credit cards.

Once the courts rule in favor of the debtor, he will have to wait for 1.5 year so that authorities will re-check his economic situation.

However, given the time slow-paced Greek Justice, the process may take must longer.

According to the amendment, “if the debtor wins the case at the district courts, he will be temporarily ‘protected’ from his debts for 18 months. He will see his debts to be 100% written-off, when authorities check that his economic situation has remained unchanged for 2.5 years.”

The small debtors amendment was passed at the Greek Parliament together with the voting for the 3. bailout last Friday.

Of course, the SYRIZA-ANEL government keeps its social face and policies. However any social measure decided to provide some relief to millions of Greeks ends up affecting only those those living in absolute poverty. To this effect, any long-term jobless or low-pensioner with a home of his own is excluded from debt write-off regulation, even if he owes 2,000 or 4,000 euro. He can sell his home for a piece of bread and pay his debt to the state and the banks. Right.

PS  I suppose Step 7 will manage to exclude all debtors to the banks from the regulation…

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  1. To use this write-off debt clause, you should have no possessions at all. If you have no possessions at all, no-one can take anything from you, anyway. That clause is useless.

    • keeptalkinggreece

      they can arrest you and put you in jail for debts to the state over 5,000 euro. Or has this clause been abolished?

      • René Henri Pasche

        Unbelievable bureaucratical nonsens. In a civilized State in Europe nobody can be put in jail only for private debts or debts to the state if there is neither fraud nor cheating. In principle there is no difference between Joe who does not pay the milkman and Jack who does not pay his taxes. BTW there are neither enough prisons nor judges in Greece to implement this nonsens.

        • keeptalkinggreece

          theoretically it is so in GR – I mean a relevant law passed in 2013 – I think- for debts over 5K euro. There were also planning to build special economic prisons. But they run out of construction material…

        • Giaourti Giaourtaki

          There are enough people in jail as they didn’t understand the antisocial language of the shit, so called “freelancers” or “independent contractors” who just had no other opportunities to get a job, they end up in jail for not paying taxes and sometimes also for not paying health care insurance. They are just subcontractors and none of the real gangsters in this fraud – the main contractors, big businessmen and the bastards of authority who write their laws in the “abstract” language of power that also often justifies even more capitalist nonsense like most universities for their divide and conquer.

        • In Cyprus, where I live, you are jailed for unpaid debts. Cyprus is an EU country. As a former British colony, it practices British common law. I think you need to do research before you make unsubstantiated comments.

          • René Henri Pasche

            The British have their merits. But their penal codes never were models for enlighted governments. Take the death penalty till the middle of the last century and other drakonian punishments for little crimes etc. Unfortunatly I did study this matter, also respective British behavior in India. One of the main excuse the Nazis put forward to justifiy their criminal acts was always: “we are just doing what the Brits do in India, Southafrca, and elsewhere. I knew that the RAF still has a base in Cyprus, but that the law inforcement authorities there still think and behave in the spirit of their old colonial power was new to me. European? Sorry, but not for me.

          • Rubbish. It may have been part of common law a century ago, but you are not automatically jailed in the UK for debts. It is very rare — in other than cases of criminal fraud.

          • In 2014, 16,000 Irish people were send to court for not paying their TV licence… Yes, there are always those who try to escape paying up, however, the demographics show that the vast majority of those summoned for this crime are from the poorest areas in the country and while no evaluation of their situation is available, you can conclude that the annual €160 for this licence is too much for them. But rather than looking for a solution to this problem, the authorities spend a vast fortune on “enforcing the law” with on average 18 people a day send to prison for non payment of licences and fines, costing the tax payers millions with no return for it…
            As for Britain, only a few days ago did the BBC report on a homeless, pennyless person without benefits getting fined £300 for “stealing” food from a supermaket…

  2. Putting someone in jail for debt is barbaric. That said I would think this programm to be a good thing. You might want it to be more accessible on the terms but even like this it might already cost up to half a billion.
    As for this “To this effect, any long-term jobless or low-pensioner with a home of his own is excluded from debt write-off regulation, even if he owes 2,000 or 4,000 euro.”
    Im on board with enlargening a debt write of to those who will otherwise be in service to their creditors forever(be it countries or people), but this is where you loose me. Why should someone owning property worth tens if not hundreds of thousands be allowed to write of their debt of 2000 or 4000? Noone owning a house has to starve. First of all there is no rent, second you can use the house as colletaral for what you need plus a debt of 4000 wont put you in the debt spiral, interest is not that high. And lastly if there is someone like you describe whos pension is so low that even without rent the money isnt enough, a debt write off wont help in the long run(just like a haircut wont help in the long run if there are still deficits running), so instead cover their healthcare costs or raise minimum pensions.

    • keeptalkinggreece

      read my latest post on : decreasing minimum pensions. 3. bailout is the sell-off of Greek life.
      Example: I have a home of 60qm + pension 600 euro per month, I depend on my children & relatives to cover my basic monthly expenses. I cannot pay Property tax, ENFIA, I cannot pay my full taxes to the state. I cannot sell my home as no buyers around. Or I can sell it for 20,000 euro max. My debt accumulates. What should I do?

      • I dont know what you can do, but so long as you cant cover your monthly expenses a debt write off wont help you much either, the debt will just accumulate again. Btw, in the situation you describe I find it not just ok but almost natural not to pay taxes but this is different from what we talked about in the Knossos article. Likewise so long as its your home were talking about and not something you rent out you should never be forced to leave it nor should power companies be allowed to turn off the lights, just because bills couldnt be paid.

        • keeptalkinggreece

          income up to 5,000 euro used to be tax-free but this was abolished by the Troika. you’re talking about an ideal world outside the bialouts

          • Well were all fantasising/thinking about various scenarios here, ultimatlely none of it matters as neither of us sits in parliament.
            As for myself, i try to judge each measure on its own merits and then do comparison. Because things do weigh against each other.
            For example you have problems with paying property tax and while I sympathise with your problems and think there needs to be a government solution for people in this situation, Im absolutly not against a property tax. Because your situation might improve simliarily if a. property tax is abolished, or b. low income pensions rise or c. VAT on food get lowered again.
            Now if we discuss these measures it is too easy to say theyre all good because they can all help me in my situation, because its not a. AND b. AND c. it is one or the other as every measure costs money. And so I d be against a. and for b. or c.
            Same with a big debt write off, there are more efficent ways to help people in actual need. Forgiving small time debt(2k-4k as you say) when people do not have enough to live from on a monthly basis is treating the symptoms while ignoring the underlying cause.

          • keeptalkinggreece

            Taxes -also property taxes – should be paid according to tax payment ability of each taxpayer and not according to some “I need X billion to repay creditors” scheme. Furthermore the property tax has been based on ‘objective values’ of properties which are much higher than the commercial values due to the crisis.

          • keeptalkinggreece

            it was just a random example, @che, not about me. BTW tutors get 5 euro per hour when they get a contract to a school’ and the same if they tutor privately kids. Many tutors are out for upcoming school year, since gov’t raised Value Added Tax to 23%

    • Giaourti Giaourtaki

      May be you don’t have any idea about ENFIA and its impact?
      Anyway, beside rent you will have to pay utilities as a 2nd rent and lots of people had to use their houses as collateral, be it for proper education – as it often don’t exist, so the crisis already started long ago – or running out of money after years of crisis and it’s just not fair as most people worked their asses off, often with 2 full-time jobs as “Gastarbeiter” to get their own shit and it was all paid already decades ago.