When you leave your loan installment unpaid, the bank can unilaterally terminate the loan agreement. But what exactly does "loan contract termination" mean and how can you proceed with loan settlement after contract termination?
Below we have gathered the most important information you need to know, to settle your debts as painlessly as possible.
What happens when canceling a loan agreement?
Let's start things from the beginning. Non-payment of due installments entitles the bank to unilaterally terminate the loan agreement. This means that you will receive an extrajudicial declaration-notice through a bailiff. You are usually informed within three months from the date your debt became "non-performing".
Therefore, it takes three months that you have not paid an installment, so that the loan is classified as "non-performing", and another three months to terminate the loan agreement.
If things get to this point, practically the loan service account goes into permanent arrears. In other words, the account is closed and you, as a debtor, can no longer pay the loan amount in installments, while the entire amount becomes immediately due.
For example, if the balance of your loan is 50,000 euros and you pay an installment of 500 euros per month, from the moment a complaint is made, the bank will claim the entire 50,000 euros through legal means.
What do I do when I receive the notification?
At this point the difficulties begin, without meaning that there is no solution. The safest option you have is to ask the bank for a loan arrangement. Keep in mind, of course, that you will start paying.
Since protective frameworks such as the Katseli Law are no longer in force, you will have to find them with the bank.
So the first thing you should do is to contact the bank as soon as possible and talk to a specialist adviser about the issue of the complaint and the regulation of your loan.
Remember that the more "cooperative" you are with the bank in providing the required financial data, etc., the more likely it is that you will end up with a loan settlement and avoid the worst.
How is the loan arrangement done after contract termination?
You can reach a settlement with the bank even after canceling the loan agreement. It is enough that your finances and assets prove that you cannot service the loan in its current form and therefore the arrangement is necessary.
The type of arrangement (short-term, long-term) that the bank will propose depends on your financial situation.
If the loan is a mortgage , the bank is very likely to offer you:
a reduced dose interval e.g. 3 years
the extension of the loan
the reduction of the interest rate while increasing the duration
The arrangement of the loan after contract termination always depends on the age of the borrower and/or the guarantor.
How do I know if the terms will suit me after the loan is arranged?
Most of the time, finding an arrangement that will be acceptable to both the bank and the borrower is a difficult equation.
Borrowers usually believe that they should give an installment much lower than the one offered by the bank based on their financial assets and living standards.
For this reason, you must be ready for a realistic solution that will give you a breather, but will not erase your debt. Of course, all of this depends to a very large extent on your financial situation.
What is the mediator's role & how can he help?
There is another solution for arranging a loan after contract termination, which is the Banking and Investment Services Ombudsman.
The Mediator operates as an independent institution with the primary purpose of impartially and transparently examining disputes between consumers and banks and seeking their amicable settlement.
He is accredited by the Ministry of Justice, Transparency and Human Rights and assists the parties in reaching a mutually satisfactory agreement.
The Ombudsman does not issue a decision and does not impose a solution. Its role is to assist the negotiations between the parties to reach a mutually acceptable agreement. You can find the updated list of accredited mediators at www.diamesolavisi.gov.gr/anazitisidiamesolavitwn or send an email to diamesolavisi@justice.gov.gr.
What if I don't request a loan adjustment right away?
If you don't do it, the bank has the option after terminating the loan contract to issue a payment order.
A payment order is a court order and it is issued without you appearing in court. It is an enforceable title, on the basis of which enforcement can be carried out.
In other words, it is the beginning of the "bad" ones, which will follow and will procedurally reach the confiscation and auction. You should also know that any issuance of a payment order against you implies a registration in the file of Teiresias.
How can I defend myself?
If you are served with a payment order for your debt, you must contact a lawyer immediately. As a debtor, you have 15 working days to file an objection against the payment order.
The opposition contains the claims proposed by the debtor in his defense, with which he requests the partial or total cancellation of the payment order.
By objecting, you have the right to present reasons concerning the validity or unfairness of the terms of the loan agreement, such as:
- the interest
- the interest rate
- the amount due
- any reason that may affect the legality of issuing the payment order
If the objection is accepted by the Court, then the payment order is cancelled.
Can it be seized and auctioned?
The forced execution to satisfy a monetary claim is done by confiscating the property of the person against whom the execution is directed. In turn, this mostly leads to the auctioning of the seized item.
The most common practice of banks to secure their claims is the seizure of properties, which can also be imposed on an ideal portion of a property, when it belongs to several co-owners (i.e. when there is ownership of a percentage of the property).
The fine ownership is also confiscated, as well as the rest of the real rights. The confiscation of property also extends to warehouses, as well as garages, only if they are included in it. The main act of the post-seizure enforcement process is the sale of the seized items by auction.
Now you know what happens in the termination of a loan contract and how the loan is adjusted after contract termination. We hope you get untangled as quickly and painlessly as possible! And if you want to know more about housing or consumer loans , we are here.
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