Assignment of zero payments to the applicant and exemption of first residence - The no. 354/2019 Decision of the Magistrates Court of Veria

The following is the Decision of the Veria Magistrates' Court dated December 19, 2019 and No. 354/2019, on a case successfully handled by our office, which set zero payments for the applicant and exempted her primary residence from the sale with the payment of 80% of the object value.

Specifically, it set zero payments, against debts of 64,518.09 euros, judging that the obligation to pay monthly installments would lead to impoverishment of her family, which would violate the general principle of law according to which no one is obliged to do the impossible.

At the same time, the applicant will pay 80% of the objective value of the property, which amounts to 24,205.14 euros, i.e. 19,364.11 euros.

Therefore, the total "haircut" amounted to approximately 45,000 euros, occupying 70% of the debts.

The following is the text of the Decision (edited only to delete the names of the parties)

NUMBER 354/2019

THE JUSTICE OF THE PEACE OF BERIA

CONSOLIDATED by Justice of the Peace Kornelia Hatzipanayiotou, appointed by Act of the Director of the Veria Court of First Instance, with the collaboration of Secretary Soultana Chrysopoulou

MEETING publicly in its courtroom in Veria, on February 18, 2019, to try the case between:

APPLICANT – KALOUSA: ……………….. who was represented in Court by her attorney Thomas Kalokiris (AM Board of Directors of Thessaloniki 11982).

THE APPLICATION – CALL: 1. The banking company with the name "Piraeus Bank SA", headquartered in Athens (4 Amerikis), is legally represented and was represented in Court by its attorney-at-law ………., 2. The banking company with the name "Agricultural Bank of Greece SA", which is under special liquidation, headquartered in Athens (25 Panepistimiou), is legally represented and was not represented in Court by anyone and 3. The Greek State, which is legally represented by the Minister of Finance and was represented in Court by the Judicial Representative of the National Security Council ………..

SUBJECT OF CASE. The summons dated 15-11-2018 and with cat. no. 250/EKOUS/15-11-18 reinstating the application dated 27-10-14 with cat. no. 446/EKOUS/29-10-14 for the settlement of debts, of voluntary jurisdiction, for the discussion of which the hearing referred to at the beginning of this document was set.

During the discussion of the case, which was read out in turn from the board, the parties appeared as mentioned above and their attorneys orally presented their claims and requested that what was stated in the minutes and in their written submissions be accepted.

STUDY THE CASE AND THINK ABOUT THE LAW

[…] With the present application, as admissibly completed and corrected, the applicant, citing lack of bankruptcy capacity, permanent inability to pay her overdue debts to her creditors and setting out her family and financial situation, requests, based on the provisions of Law 3869/2010 “Regulation of debts of over-indebted natural persons and other provisions”, i) that the arrangement plan be ratified as proposed or amended with the consent of the creditors, ii) in the alternative, in the event of failure to reach a compromise, that her debts be regulated, according to the specific provisions set out in her application, hi) that it be recognized that by complying with the regulation she will be relieved of her debts and iv) that the property that constitutes her main residence be excluded from the sale.

The application with the above content and request, competent in substance and in place, is submitted to be tried by this Court, (period 1^the, art. 3 of Law 3869/2010), under voluntary jurisdiction (art. 1, paragraph b of the Code of Civil Procedure in conjunction with period 2^the, art. 3 of Law 3869/2010 and art. 739 et seq. of the Code of Civil Procedure). Furthermore, it is legal, based on the provisions of art. 1 et seq., 4, 5, 8 and 9 of Law 3869/2010, as in force after their amendment by Law 4161/2013, given that the application in question was filed on 29-10-14 and Law 4549/18, the provisions of which also cover pending applications (art. 68).

[…]In view of the fact that no judicial settlement was reached between the applicant and her creditors on the specified ratification date, its substantive validity must be further investigated after payment of the legal fees.

The defendant creditor bank, through a statement by its attorney at the hearing during the discussion, which were recorded in the same minutes of this case and were specified in their written proposals, which were submitted during the discussion, denied the application and requested its rejection. Furthermore, it claimed that the applicant fraudulently became unable to pay her debts, because she took out loans knowing that she would not be able to meet the obligations arising from them. The above claim constitutes a legitimate objection under article 1, paragraph 1 of Law 3869/2010 of fraudulently becoming permanently unable to pay overdue financial debts and should be further examined on its merits. Furthermore, it was alleged that the applicant violated the duty of honest declaration regarding her financial situation, as the income reported in the application falls short of her living costs, which, according to her allegations, entails concealment of income in combination with the fact that she does not state the reason for not working. This claim is legal (art. 10 par. 1 of Law 3869/2010) and will be examined further on its merits. Finally, it proposed the claim that the applicant is abusively exercising her right to be subject to the regulations of Law 3869/2010, as she received loans from the defendants and with her application she essentially seeks the cancellation of her debts. However, these allegations - even if true - do not constitute an objection under Article 281 of the Civil Code and are deemed to be rejected, because the applicant's choice to be subject to the regulations of the law constitutes her legitimate right to a modern legal framework that requires her economic and social liberation in order to integrate into social and economic activity with a view to the general interest (Ath. Cretan Law Regulation of the debts of over-indebted natural persons and other provisions - 2010 Edition, Introduction, Appendix) and this choice alone does not establish civil liability. The settlement plan is determined at the free discretion of the debtor and constitutes a proposal to the creditors, while it is not binding on the Court, which will freely assess this proposal based on the relevant elements, the lessons of common experience and the living conditions and needs of the applicant, and in case it deems this unreasonable and unacceptable, it intervenes and shapes it by deviating from what was requested (see I. Venieris, Application of Law 3869/2010 for over-indebted natural persons, 2nd edition, p. 179). Finally, weakness does not necessarily constitute an extraordinary event, but also other factors, such as failure regarding the borrower's financial capabilities, unfortunate planning, aggressive credit promotion practices, income constraints, high interest rates). The Greek State, which appeared in its capacity as guarantor, denied the application and requested its rejection, pointing out that the installments that have been forfeited and have been confirmed are not included in the application in question and for this reason are exempt from any regulation ordered by court decision.

From the sworn testimony of the witness examined in the hearing of this Court, which is contained in the minutes of the same number as these, from the documents presented, useful also for the collection of judicial evidence, from the confessions deduced from all the allegations of the parties and from what is known to all, the following essential facts were proven: The applicant, born on ….., is married and the mother of two minor children. Furthermore, the applicant is temporarily employed at ………… under an eight-month OAED program with an income of approximately 480 euros per month, while she goes through long periods of unemployment, and her husband works seasonally in cotton ginning factories or in agricultural cooperatives, while he is currently unemployed and temporarily receives 390 euros per month as unemployment benefit. She lives with her family in Makrochori, Imathia, in a property she owns. Her total declared family income was for the tax year 2017 8,387.93 euros (6,792.18 euros in paid employment + 1,595.75 euros in unemployment benefit) for her husband and zero for herself, for the tax year 2016 6,346.88 euros (5,914.88 euros in paid employment + 432 euros in unemployment benefit) for her husband and zero for herself, for the tax year 2015 3,352.44 euros (1,356.37 euros in paid employment + 1,996.07 euros in unemployment benefit) for her husband and zero for herself, for the tax year 2013 7,184.63 euros (1,356.37 euros in paid employment + 1,996.07 euros in unemployment benefit) for her husband and zero for herself, for the tax year 2014 7,184.63 euros (2,142.72 euros in unemployment benefit) for her husband and 407.75 euros for herself euros (4655.61 euros in paid employment + 2529.02 euros in unemployment benefit) for her husband and 2,518.73 euros for herself, for the financial year 2012 4,738.52 euros (4051.87 euros in paid employment + 686.65 euros in unemployment benefit) for her husband and zero for herself and for the financial year 2012 5,608.30 euros (4246.30 euros in paid employment + 1362 euros in unemployment benefit) for her husband and zero for herself (see settlement notes). The living expenses of the applicant's family, which include food expenses, fixed expenses (electricity, water, telephone bills, ENFIA, travel expenses, medical care, etc.) amount to approximately €900 per month, according to the Court's judgment. The applicant has full ownership of apartment 1^u floor area of 122.55 sq.m. with a corresponding percentage of co-ownership in the entire plot 15% located in a two-story building in Makrochori, Imathia on the street ……… The said property came to her by virtue of the number …….. sales contract of the notary of Veria Anna Symeonidou, which was legally transcribed in the books of transcriptions of the Veria Mortgage Registry. The objective value of the above property amounts to the total amount of 24,205.14 euros as shown by the submitted property value calculation sheets. In a period prior to the year from the filing of the legal application, the applicant assumed the following debts towards its creditors, respectively, which, by law, are considered overdue upon notification of the application and are calculated at their current value at the time of notification of the application, with the exception of the loans mentioned below that are secured in rem, the interest on which continues at the interest rate of the current debt until the time of issuance of the decision (article 6 par. 3 of law 3869/10) and specifically the applicant owes 1) to "Piraeus Bank S.A.", according to the debt certificate dated 17-1-2019, from the housing loan agreement with identification number 10121000002394626, the claim of which is in rem insured, the amount of 59,817.64 euros and 2) to the "Agricultural Bank of Greece SA", according to the debt certificate dated 24-9-2014, from the consumer loan agreement with account number 5266400801352, the amount of 4,700.45 euros. Therefore, the total amount of the above debts of the applicant amounts to 64,518.09 euros. The applicant was initially consistent with her above loan obligations. However, due to the economic crisis, her long-term unemployment, her husband's unstable employment, the unforeseen increase in the cost of living and the increase in direct and indirect taxation, the repayment of her loans became impossible. As a result of the above, the relationship between its liquidity and its debts during the current period is negative in the sense that after deducting the amount required to cover its monthly needs, its remaining liquidity does not allow it to meet its debts. This relationship is not expected to improve, at least in the near future, since its monthly needs are not expected to be limited, while at the same time its loan obligations are constantly increasing due to the burden of the loan agreements with default interest. Under the above facts, it is proven that the applicant, who does not have bankruptcy capacity, has become, without malice, permanently unable to pay its financial debts. Moreover, the proposed objection of breach of the duty of truth is also rejected as unfounded in substance, given that there was no breach, on her part, of the duty of truth or honesty in relation to the recording of her financial situation. The plan for the settlement of her debts proposed by her was not accepted by her creditors and consequently the applicant meets the conditions for their inclusion in the regulation of Law 3869/10 and the conditions for the settlement of her debts by the Court, in accordance with art. 8 et seq. of Law 3869/2010, are met, given that there are no disputed claims.

It should be noted that the provision of art. 62 par. 3 2b of law 4549/18, which also covers the pending applications under art. 68 par. 8, provides for the distribution of the monthly installments of the arrangement art. 8 par. 2 and that of art. 9 par. 2 over the period of payments of the three-year or five-year period of the first arrangement. It should be noted that in the context of the distribution, the basic principles of the two arrangements must be observed, namely that of not exceeding the debtor's repayment capacity, as defined by the court, with regard to the arrangement of art. 8 par. 2 and that of paying the mandatory rescue consideration to the creditors with regard to the arrangement of art. 9 par. 2 (see also the explanatory memorandum of law 4549/18). Therefore, with regard to the installment of art. 8 par. 2, the amount of the difference should be determined monthly after deducting from the amount of the installment of art. 8 par. 2, as formed after the inclusion of the advances, that of the installment of art. 9 par. 2, and provided that of course there are margins. In addition, according to the above provisions, no grace period is provided between the two arrangements, they begin at the same time and the amount of the monthly installment is distributed according to the above. In this case, due to the exceptional circumstances faced by the applicant, which focus at the present stage on her unfavorable financial situation due to her husband's unemployment, her unstable employment and her increased family obligations - as she has two minor children - and the resulting lack of income to cover her basic living needs, the Court should, within the scope of its ability, in application of the provision of art. 8 par. 5 of Law. 3869/10, in view of her proven inability to pay any amount at present towards her debt, to set zero payments for the applicant for a period of three years, i.e. 36 months, starting on 1^the January 2020. The Court will not set a new hearing to examine the case of redetermination of the monthly payments for the applicant, as there is no prospect of improvement in her financial data and income within the time period of the above regulation, taking into account the general adverse economic situation and the resulting uncertainty of ensuring sufficient income in the immediate future, as well as the fact that the regulation of article 8 par. 2 applies in parallel with the regulation of article 9 par. 2 for the preservation of the applicant's main residence.

Furthermore, the above regulation for the applicant, pursuant to article 8, paragraph 2 of Law 3869/2010, should be combined with that provided for by the provision of article 9, paragraph 2 of Law 3869/2010, provided that a request for exemption of the property owned by her has been submitted. The objective value of the above property, which amounts to 24,205.14 euros, does not exceed the prescribed limit for tax-free acquisition of a first residence for the category to which the applicant falls and therefore it is permitted to be exempt from the sale. Therefore, monthly payments should be set for its rescue, for which the applicant should pay 80% of its objective value (article 9 par. 2 of Law 3869/2010, as replaced by article 17 par. 1 of Law 4161/2013 and in conjunction with article 24 of Law 4161/2013), i.e. 19,364.11 euros (24,205.14 X 0.80). The Court, for the rescue of the above main residence of the applicant, sets monthly payments for 20 years, i.e. 240 months, which will begin on 01.01.2020, and will be payable within the first five days of each month. Each monthly payment will amount to 80.68 euros (19,364.11 /240). The payment of the installments for the rescue of the applicant's main residence will be made with interest in accordance with article 9, paragraph 2 of Law 3869/2010, without compound interest, at the average interest rate of a housing loan with a floating interest rate, which will be in effect at the time of repayment according to the statistical bulletin of the Bank of Greece, adjusted with the reference interest rate of the main refinancing operations of the European Central Bank, as of 1^the of the defendants, creditor of "Piraeus Bank SA", in preferential satisfaction of the claim secured in rem on the applicant's main residence. It is noted that the two arrangements are applied simultaneously, without providing for a grace period in accordance with the provision of art. 62 par. 3 2b of law 4549/18, which also covers the pending applications under art. 68 par. 8.

In light of the above, the application under consideration should be partially accepted as to its substantive validity, as specifically provided for in the operative part. A default judgment fee is not set because no default judgment objection is permitted against decisions issued under Law 3869/2010 (Article 14 of Law 3869/2010). Legal costs are not awarded in accordance with Article 8, paragraph 6 of Law 3869/2010.

FOR THESE REASONS

JUDGES in the absence of the second defendant and in the absence of the other parties and the guarantor.

REJECTS everything he deemed unacceptable.

The application is partially GRANTED.

DETERMINES that for three years, i.e. 36 months, the applicant must pay, pursuant to art. 8 par. 2 and 5 of Law 3869/2010, zero monthly payments to her creditors, which will begin on 01.01.2020.

EXCLUDES from the sale the described main residence of the applicant, namely an apartment 1^u floor area of 122.55 sq.m. with a corresponding percentage of co-ownership in the entire plot 15%, located in a two-story building in Makrochori, Imathia, on the street ....

IMPOSES on the applicant the obligation pursuant to article 9 par. 2 of Law 3869/2010 for the preservation of her above-mentioned main residence for a period of 20 years, i.e. 240 months, to pay monthly to the 1^the as the creditor of "Piraeus Bank S.A.", in preferential satisfaction of its secured claim, the amount of 80.68 euros. The payment of these monthly installments will be made within the first five days of each month, starting from 01.01.2020 and will be made with interest in accordance with article 9 par. 2 of Law 3869/2010, without compound interest, at the average interest rate of a mortgage loan with a floating interest rate, which will be in effect at the time of repayment according to the statistical bulletin of the Bank of Greece, adjusted with the reference interest rate of the main refinancing operations of the European Central Bank

JUDGED, decided and published in Veria on December 19, 2019, at an extraordinary and public hearing of all the parties and their attorneys.

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THOMAS STEF. HAPPY

LAWYER MDE