What is the Arrears Resolution Process (ARP)?
It is the procedure stipulated by the Code of Conduct under L.4224/2013, as amended and currently in force, in accordance with the Decision 392/1/31.05.2021 of Credit and Insurance Committee of the Bank of Greece (BoG), for implementation by the Banks, as well as the borrowers facing financial difficulties. The ARP describes the stages, deadlines and the minimum content of information, that should be mutually provided by the Bank and the borrower, in order that the risks and repayment ability of each borrower can be evaluated properly.
To Whom is the Arrears Resolution Process (ARP) addressed to?
- To the borrowers (debtors/guarantors) Individuals / Professionals and Small Businesses facing financial difficulties and being unable either to meet their debt repayment plan or a change in their financial situation is estimated that will lead directly to their inability to meet their loan obligations
The term “Small Business” denotes Legal Entities whose annual turnover in the past 3 fiscal years did not exceed an average amount of one million euros (€ 1.000.000).
Any provision applied to borrowers with debts in arrears shall apply accordingly to guarantors, based on the type of debt they have guaranteed (individual or enterprises debt).
Exceptions / Suspension
The application of Code of Conduct doesn’t include:
- 1 Debts from loan agreements that have been denounced prior to 01/01/2015
- 2 Debts against borrowers that do not exceed as a total of any of the following limits:
- the amount of € 1,000 in case of borrowers – Individuals/Professionals,
- the amount of € 5,000 in case of borrowers – Legal Entities – Small Business, as defined for “Small Business”
- 3 Debts against Legal Entities that are not “Small Businesses”
Furthermore, the Bank, based on the current framework, has the possibility to suspend the start of ARP or to suspend already initiated ARP in the following cases:
- The borrower has submitted an application for out-of-court debt settlement according to par. 1 of article 8 of Law 4738/2020 or the Institution has notified the borrower of an invitation for out-of-court debt restructuring according to par. 2 of article 8 of L. 4738/2020 and for the period until the end of the procedure without result for any reason.
- The borrower has signed a debt restructuring agreement in the context of the out-of-court debt settlement procedure under article 5 of Law 4738/2020, which is not subject to the condition of consent of the State or Social Security Institution, and the Institution is bound by the above contract.
- The borrower or the Institution or other creditor has submitted an application for ratification of the borrower's restructuring agreement and if such an agreement is ratified or concluded in accordance with article 41 of Law 4738/2020 or par. 5 of article 103 of Law 3588/2007, which is binding on the Institution.
- The borrower or the Institution or other creditor has filed a claim for the borrower to be declared bankrupt and for the period until any rejection of the claim.
- The borrower has submitted an application for inclusion in a procedure of L. 3588/2007 or L. 3869/2010 or L. 4605/2019 or L. 4469/2017, which is pending, or the issuance of a court decision is pending or the procedure itself is pending, or when the borrower has been subject to the procedure of article 68 of law 4307/2014, which is pending.
- Applies the case e) of par. 3 of article 7 of Law 4738/2020
- When the borrower-legal entity has been put into liquidation.
- When third party creditors have taken legal action to secure the borrower's debts to them.
- In any other case specifically provided by current legislation.
What are the benefits of the Arrears Resolution Process (ARP)?
- The collaboration of Bank – borrower enables a suitable arrangement to be reached in a timely manner, as it is performed within a climate of mutual trust and honest exchange of information.
- The adherence to the transparency rules as well as the detailed information of the borrower is ensured.
- For the arrangement proposal or final settlement solution submitted to a borrower – individual, the minimum level of “reasonable living expenses” is also taken into account among other things.
In case of an agreement upon the arrangement proposal or final settlement solution within the aforementioned framework, the smooth repayment of debts is achieved, which may, where appropriate, limit the cost of the loan for the borrower and class actions and other litigations are avoided.
Which are the implementation stages of the Arrears Resolution Process (ARP)?
- 1 Communication between borrower-Bank
- 2 Submission of borrower’s financial data
- 3 Assessment of borrower’s financial data and overall financial situation
Submission of suitable arrangement proposal or final settlement solution of the borrower’s debts
Process of borrower’s appeal assessment