Radical Left Coalition party Syriza and its leader Alexis Tsipras tabled a draft law in parliament for the relief of over-indebted households from loan obligations on Friday. The bill will be debated in parliament immediately after the parliament’s summer recess from August 3 to August 20.
The bill proposes full write-off of the loan obligations to banks of borrowers whose individual or family income is below the poverty level (7,178 euros individual income or 15,073 euros for a four-member family). Other provisions include partial write-off of loan obligations to banks of borrowers who have suffered a reduction in their nominal income, with the write-off corresponding to the percentage of reduction of the income from January 1, 2010 to the present.
A third provision is the reduction of total loan obligations to banks of an individual borrower or family so that the monthly payment of installments to all banks collectively will not exceed 30 percent of the monthly individual or family revenues. The remaining sum above the 30 percent of the borrower’s annual obligations will be permanently written off. The reductions will be effected on an annual basis and reviewed at the end of each year so as to include prospective changes in the total annual income.
Tsipras said that the banks were making up the losses from bad loans through their recapitalization from the Credit Stability Fund. He added that banks continue to demand the repayment of the delayed installments, regardless of the fact that those loans have been classified as bad debts and are taken into account by the recapitalization.