Decoding Over-Indebtedness in Europe: Managing Procedures with a Unified Tech Solution

Decoding Over-Indebtedness in Europe: Managing Procedures with a Unified Tech Solution

QUALCO |

Are you aware of how over-indebtedness, a significant issue within the European Union (EU), affects individuals, businesses, and the broader economy? Over-indebtedness refers to situations where debtors face difficulties meeting financial obligations due to immediate payment challenges or chronic issues like insolvency, where debts outweigh assets.  

The EU has undertaken several legislative measures to tackle over-indebtedness and provide relief for over-indebted individuals or entities, prioritising negotiated solutions between debtors and creditors, often involving court supervision or approval. However, there are still disparities in implementing these laws across countries, with financial institutions facing challenges adapting to these diverse systems and managing the varying legal requirements and procedural intricacies across different jurisdictions.  

Our latest report decodes the complexities that over-indebtedness presents in Europe. Join us as we deep dive into the cases of Greece, Italy, Spain, and France, four countries facing high unemployment, sluggish economic growth, substantial household debt, and the repercussions of austerity measures of the 2008 Global Financial Crisis.  

Greece: Out of Court Workout process 

Legal Provisions in Greece such as the "Katseli Law" aim to protect debtors' primary residences from foreclosure and eviction due to over-indebtedness, by providing avenues for debt relief while allowing debtors to keep their homes. The newest law, 4738/2020, offers an out-of-court workout process, also known as the extrajudicial debt settlement procedure for over-indebtedness. Financial institutions must align with this approach, closely monitoring each stage for proposed repayment plans.

Italy: Procedure per la composizione della crisi da sovraindebitamento

In Italy, the "Procedures for the Composition of Over-Indebtedness Crisis" (Procedure per la composizione della crisi da sovraindebitamento) has significantly changed the management of financial distress for individuals and small businesses. The procedure was designed to assist those facing insolvency situations not covered by traditional corporate bankruptcy regulations. This fills a noticeable gap in the Italian legal framework concerning personal over-indebtedness. 

Spain: Ley de Segunda Oportunidad 

Spain's Personal Insolvency Law, the Second Chance Law (Ley de Segunda Oportunidad), allows debtors to restructure or write off their debts, offering them debt relief and a chance to a fresh start. The primary criterion for eligibility is that individuals must have debts to at least two different creditors. QCR offers third-party document management, reducing administrative burdens and minimising errors, leading to a more efficient legal process.

France: Surendettement 

In France, the process of managing over-indebtedness, known as "Surendettement", is designed to assist individuals in resolving their debts with creditors and is available to the public as a complimentary service. The process is not limited to debts originating from banking or financing but also includes other debts, such as rent obligations. The QCR BdF module automates the exchange of notifications between creditors that use it and the Banque de France, empowering financial institutions to save time and resources.

Read our report to discover how QUALCO Collections & Recoveries:  

Decoding Over-Indebtedness in Southern Europe  Managing procedures with a Unified Tech Solution - Blog image

  • Ensures precise legal and procedural requirements tracking in Greece, facilitating a seamless experience for all parties involved.
  • Configures legal processes with flexible workflows, ensuring compliance and adaptability through customisable fields to meet various needs efficiently, including those related to Italy.
  • Streamlines court interaction and document management for institutions operating under Spain's Second Chance Law, ensuring document submissions and real-time case updates. 
  • Enables the setup of agreed or imposed payment plans and ensures progress tracking via automated strategies and a powerful decision engine in France.
     

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