Debtor-Borrower Defense Against Payment Order and Auction

The new bankruptcy framework for over-indebted legal and natural persons is underway, with the vast majority of borrowers remaining completely unprotected unless they... liquidate all their assets.

Therefore, in the absence of a protective legislative framework, a storm of auctions and seizures is coming in the near future, with the debtor-borrower in a defensive role, trying to assert any remaining rights he has after the fact.

How does the process leading to a property auction usually begin with the bank?

The enforcement procedure is procedurally preceded (in the vast majority of cases) by the issuance and service of an Order for Payment, which the debtor - borrower may challenge by filing an Objection before the competent Court within the short period of 15 working days from notification.

So, what should the debtor do if he receives a Payment Order from a bailiff and what is his defense?

Within the short deadline of 15 working days, he must file and serve (notify) the bank with an Objection with admissible and valid reasons that concern either the claim itself (the loan, interest, the liquidated amount, etc.) or the title (issuance procedure, jurisdiction, compliance with pre-trial procedures, etc.), so that the Court can subsequently determine the legality or otherwise of the amount of the claim, as well as the enforceable title itself (i.e. the Order for Payment).

What are the main defense tactics?

The case law has a wealth of material to show from cases of borrowers who were vindicated after filing an Opposition and thus stopped the execution against them. We mention the most common defenses, and there are many more specialized defense tactics, which depend on the loan case in question:

• The Payment Order incorporates illegal charges and illegal expenses in violation of Article 78 of the Constitution, the principle of transparency and in this way the claim is uncertain as to the amount of [contribution of Law 128/1975, file costs, creditworthiness costs, account opening costs, legalization costs, illegal compounding of these, etc.]
• The Payment Order was issued by a Court that lacks territorial or substantive jurisdiction [e.g., issued in Athens, when the borrower is a resident of Thessaloniki]
• The Payment Order should not mention or refer to the interest rates that were in effect during the loan, so that the amount of the claim cannot be safely determined.
• The claim is not settled and legal because it includes interest calculated on a 360-day year, in violation of the provisions of 2 par. 6 of Law 2251/1994 and article 372 of the Civil Code.
• Objection to abusive exercise of a right [e.g. when the loan is terminated abusively or there is a very long period of inactivity on the part of the bank or when the bank unjustifiably refuses to consent to its settlement].
• Unfair terms concerning guarantors. Guarantors waive in advance all objections given to them by law, such as the objection of partition or liberation. In certain cases [for example, when guarantors do not have technical knowledge, are illiterate, are very old or very young, have a degree of disability, etc.] the Courts have ruled that waiving all rights given to them by law is unfair.
• Lack of active legalization of the banking company, when multiple transfers have occurred without cumulatively complying with all the conditions set by law.
• Objection to the limitation of contractual interest and default interest.
• Incorrect calculation of interest on the loan agreement.
• Unfair General Terms and Conditions (GTC). [It has been found, for example, that terms that do not clearly specify the interest rate in advance, leave the price intentionally indefinite, burden the contract with excessive costs, give the bank the right to terminate the contract whenever it wants, etc., are unfair.]
• The claim does not arise with certainty from the documents provided by the bank for the issuance of the Payment Order.
• Offsetting of any counterclaims and collateral, especially bond or pledged products.
• Behavior of the bank contrary to the principle of good faith and business ethics.

 What follows the Payment Order?

The Payment Order is followed by the commencement of enforcement. The bank can now seize (in addition to the amount of the non-seizable amount) bank accounts, rents, salaries and pensions, as well as movable and immovable property. The properties, after being seized, will likely also be put up for electronic auction.

To stop the enforcement process in its infancy, in addition to a well-structured and well-founded Opposition, we also need a Request for Suspension accompanied by a request to stop all enforcement proceedings until the Court's Decision is issued.

Does the debtor have the possibility of defending against seizure and auction?

Yes, the debtor may again file an Objection against the Foreclosure Report that specifies the auction of his property, but now (since he has already filed an Objection against the Order as above) the grounds for his Objection are limited to fewer issues that concern either the claim (to the extent not covered by the previous objection) and in particular the auction procedure, the manner of conduct and the first bid price.

What is the debtor's defense against auction?

The main tactical defenses against seizure and auction (in addition to the basic ones above) are, among others:

• Errors made by the bank during the preparation of the seizure report and the auction process [e.g. incorrect description of the property, issues regarding the content of the enforceable title, jurisdictional issues, inaccurate description of the enforceable title, etc.]
• The actual commercial value of the seized property is greater than the first offer price.
• Abusive acceleration of auction when there is other property or the amount of the claim is proportionally small [e.g. while the debtor owns various properties, his residence is auctioned]
• Unfair acceleration of auction [e.g. during debt settlement negotiations, conduct against good faith]
• Lack of active legalization [when multiple transfers of the loan have occurred without cumulative compliance with the conditions]
• Other procedural errors.

For any issue that concerns you, do not hesitate to contact us.

We have extensive judicial and extrajudicial experience in cases of successful defense of borrowers against illegal banking actions and we stand by your side, helping you in this unequal struggle.

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Thomas Steph. Summer 

Lawyer LLM 

Min. Doctor of Law, AUTH

Commercial & Banking Law Department