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Lower House passes amendments to debt discharge law

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The Chamber of Deputies adopted on last Wednesday the bill amending the Law on debt discharge by selling off property in order to pay off loan liabilities, which provides, among others, that the 'datio in solutum' is automatically approved if the borrower's indebtedness is at least 20 percent above the maximum indebtedness rate set by the National Bank of Romania (BNR).

The bill cleared the Lower House by a vote of 171 to 94 and 11 abstentions.

The bill provides that there is always a situation of hardship: if the borrower's indebtedness exceeds the upper rate of indebtedness set by BNR by at least 20 percent; if the exchange rate of the loan currency exceeds by at least 20 percent the exchange rate at the date the loan was engaged; if the borrower's home was put in foreclosure, and in other cases that reveal a contractual imbalance.

In such situations the parties are required to effectively renegotiate the contract with reference to the new reality. The contract's adjustment - during its enforcement - to the new reality is equivalent to maintaining the contract's social utility, more precisely it allows for the further enforcement of the contract by rebalancing the services provided, reads the piece of legislation.

A situation of hardship is presumed to be in favor of the consumer who makes a notification. In checking the situation of hardship, the contract's state of crisis and the presumption of imbalance shall prevail. The decision to have a judicial revision of the contract in order to balance it and allow its continuation prevails over the termination of the contract, which shall be instructed only in the case of an evident impossibility of continuing it, the bill provides.

"During the notification period and during the settlement of applications, listing the debtor who has submitted the notification with the Credit Bureau or in other negative databases for risky or defaulting debtors is forbidden, regardless of whether this would be done at the initiative of the lender or of a central or local authority. During the time the debt discharge notification has been in effect, both the installments and the interests and penalties may be claimed from the debtor only if the creditor proves that the latter has acted in bad faith. The consumer whose mortgaged property has been subjected to a foreclosure procedure also has the right to request the court to rule the debts arising from the credit contracts as paid off, regardless of the holder of the claim, the stage thereof or the foreclosure procedure initiated against the debtor," the bill also states.

The Chamber of Deputies is the decision-making body for this bill.



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