Katseli Law: New Interest Calculation Standards and Next Steps for Borrowers

The Νόμος Κατσέλη (Katseli Law, Greece's personal bankruptcy framework for overindebted households) is back in the spotlight following a recent Plenary decision by the Άρειος Πάγος (Supreme Court of Greece) regarding interest calculation methods. Nevertheless, nearly three months after the decision was rendered, the situation for borrowers remains practically unchanged.

According to Mr. Zannis Sideris, a Supreme Court attorney and President of ΣΥ.Π.Υ.Ν.Ε. (Association for the Protection of Overindebted Households and Businesses), banks and loan servicing funds are citing delays in the "καθαρογραφή" (the formal transcription and official issuance of a court judgment) as a reason for not proceeding with the necessary adjustments. Consequently, corrected payment schedules reflecting the new interest calculations have not been sent to borrowers. As a result, many continue to pay higher installments without the necessary offsets being applied for the excess amounts already paid. Despite the delay, it is estimated that management companies will comply automatically once the transcription is complete, which legal circles expect will contain no surprises.

Proactive Steps for Borrowers

Until the matter is permanently resolved and new payment schedules are issued, borrowers have the opportunity to act proactively. One proposed practical solution is the filing of an "εξώδικη δήλωση" (extrajudicial notice) to the loan servicer. Through this process, debtors can secure their rights by formally requesting immediate compliance with the Supreme Court decision, the delivery of corrected payment schedules, and the offsetting of overpaid amounts against future installments.

The Offset Process and Associated Risks

Particular attention is required regarding the offsetting of payments. As Mr. Sideris highlights, the process is complex, involving a large number of installments, varying and non-fixed amounts, and floating interest rates. This complexity creates a risk of miscalculation by the loan servicing funds. For this reason, borrowers are advised to exhaustively verify these offsets with the assistance of their legal counsel to avoid falling victim to the complexity of the financial data.

Recourse in Case of Non-Compliance

Addressing concerns about a potential refusal by funds to implement the ruling, it is clarified that a clear legal path exists. In the event of non-compliance, the borrower can seek judicial recourse by filing an "αίτηση ερμηνείας" (petition for interpretation). The objective is to judicially confirm the rationale of the Supreme Court Plenary: that interest should be calculated based on each individual installment rather than the total loan principal. It is worth noting that even before the high court’s ruling, thousands of borrowers had pursued petitions for interpretation, securing favorable court decisions in most cases.