Cyprus’ out-of-court settlement rules
The Finance Ministry of Cyprus has stressed the importance of having stable legislation regulating out-of-court auctions in tandem with an effective insolvency framework in order to achieve a reduction of bad loans.
It is “extremely important under the present difficult economic circumstances, which have arisen due to the impact of the Russian war in Ukraine, to maintain the sustainability of restructured loans of households that are already burdened,” the ministry said in a press release.
It also welcomed a recent announcement by state-owned asset management company KEDIPES that it will subsidize interest rates so that the rates for restructured and performing loans for house purchases and other loans will not exceed 3.5% and 4% respectively in 2023.
The Finance Ministry noted that the new foreclosures framework voted by Parliament in August 2019 provides the possibility of an out-of-court solution for borrowers who have nonperforming loans. They can now take recourse to the Financial Ombudsman so that he can review their complaints against credit institutions to do with excessive charges and violations of the Central Bank of Cyprus’ code of ethics.
