It is well known that collection agencies often harass debtors with phone calls in order to collect overdue debts. This is legal and acceptable to the extent that it has been established by court precedent. That is, there must be a limit on the number of phone calls per day, third parties must not be contacted, and so on.
It is also well known that terms such as “real estate auction” and “seizure of property” cause significant anxiety and emotional distress for the majority of borrowers who are unable to make their loan payments. Many of them, even today, are not sufficiently informed about the foreclosure process and the legal steps that must be followed in order for a seizure to take place and for a home to be put up forauction.
In recent years, it has been observed that debt collection agencies do not always operate within the bounds of good faith, reliability, and full legality, but rather use methods that are not entirely appropriate to achieve their goals.
For example, individuals who lack legal standing—and, of course, legal knowledge—present themselves as lawyers to debtors. This situation causes anxiety, stress, and fear in many people, particularly older adults. It is not uncommon for them to use their title as “lawyer” to intimidate the debtor, warning that if they do not pay immediately, their home will be seized the very next day. Under this emotional pressure and the threat of immediate seizure of their property, they extract information that debt collection agency employees would not otherwise have access to.
Furthermore, under the threat of immediate foreclosure, they are pressured to make immediate payments without having first signed a loan agreement—or even to sign a loan agreement as part ofpromise of a significant debt write-off and reduction.
Why, then, should the debtor be cautious and consult a lawyer immediately before taking any action that, unbeknownst to him, could legally prove detrimental to him?
- When a proposal is typically made for a haircut and debt reduction by the funds, there are two common scenarios:
a) The debtor does NOT own any real estate in his or her name.
What does this mean for the debtor? It means that the fund cannot, through legal channels (i.e., by terminating the loan agreement, issuing a payment order, and initiating enforcement proceedings) to proceed with the foreclosure of real estate because, quite simply, there are no assets, and it is trying to entice the debtor to pay some amount voluntarily.
Therefore, it tries to persuade the borrower to pay any amount, since the fund has no incentive to proceed with a foreclosure auction. For example, if a debt, including interest and late-payment interest, totals 70,000 euros, a settlement proposal may be made for 5,000 euros or even a lump-sum payment of a smaller amount to settle the debt. Why is this done? Because the collection agency will receive at least this amount, rather than nothing at all, which is what it would receive if the debtor does not pay voluntarily.
b) The fund cannot file a motion for a payment order with the court because it does not have all the required documents.
What does this mean for the debtor? It means that the fund cannot collect the amounts owed through legal channels (i.e., by terminating the loan agreement, issuing a payment order, and initiating enforcement proceedings).
So it tries to pressure the debtor into agreeing to acknowledge the debt by signing a new private agreement with the fund debt acceptance which always states the total amount owed (which the debtor can rarely verify as to whether it is accurate and lawful) and then the reduction of that amount and the agreed-upon payment installments.
In this case, the debtor signs an agreement acknowledging and accepting the debt, is liable for the full amount, and if the debtor fails to comply with the agreement, the collection agency will have at its disposal a private agreement that will allow it to proceed with enforcement and foreclosure—something that would not be possible if the debtor had not signed this new agreement.
- When a collection agency pressures you to make an immediate payment into a bank account:
In addition to the two cases mentioned above, (a) and (b), it may mean that the debt file has been handed over to a small collection agency that is attempting to collect payments which, if not accompanied by a settlement agreement, end up, at best, being credited toward theof the loan or toward delinquency interest rather than toward the outstanding principal, resulting in no real benefit for the borrower, especially if this occurs on a regular basis.
- When debt collection agency employees ask a lot of questions seeking information:
In practical terms, this means they have reached a dead end. For example, the original debtor may have passed away, and by asking questions, they can gather information about the date and place of death, as well as the debtor’s relatives and even their financial situation, so that they can later collect the necessary information andtake action against them if feasible, or attempt to have the heirs sign the debt acceptance and settlement agreement, with the consequences described in detail above.
General practice shows that when the collection agency has a strong loan agreement and there is real estate involved, it does not contact the debtor, nor does it offer a settlement proposal or a principal reduction. Without any prior notice, it first terminates the loan agreement (if the bank has not already done so) and then issues a payment order.
Any persistent effort on their part to approach the debtor to negotiate a debt settlement not only demonstrates good faith on the part of the collection agency but may also be an attempt to create, for its own benefit, the conditions that will help it recover funds in the future.
ANASTASIA CHR. APPLE
I'M GOING TO BE A LAWYER.
Ave. 403 Mesogeion Avenue, Agia Paraskevi, Agia Paraskevi
Tel. 6945-028153, 213-0338950
e-mail: natmil@otenet.gr
www.legalaction.gr, fb: Anastasia Miliou
Author of the article:
Attorney at Law & Attorney-at-Law & Attorney-at-Law
Ave. 403 Mesogeion Street, Agia Paraskevi, Agia Paraskevi, Attica
Tel. 6945-028153, 213-0338950
e-mail: natmil@otenet.gr, info@legalaction.gr
www.legalaction.gr
