DEFERRING OF LOANS IN EMERGENCY SITUATION
DEFERRING OF LOANS IN EMERGENCY SITUATION
Settlement of Monetary Claims in Emergency
The Governing Council of the Bulgarian National Bank approved the draft Order of the Bank of Bulgaria (ABB) for deferring and settling required liabilities to banks and their subsidiaries - financial institutions in connection with the state of emergency introduced by the National Assembly on March 13, 2020 d.
Commercial banks, which have agreed to apply the approved debt deferral order, will announce publicly the relief offered on their website, in bank lounges and in any other appropriate manner.
The approved private moratorium provides an opportunity for changes in the repayment schedule of principal and / or interest rates, without changing key parameters of the credit agreement, such as the interest rates already agreed. Debts may be deferred for up to 6 months, ending on December 31, 2020. Deferred payments must have been regularly serviced or with a default of no more than 90 days by March 1, 2020.
Customers must explicitly state to their servicing bank that they wish to benefit from the facilities offered.
Three standardized mechanisms are envisaged:
1. • Mechanism No. 1 - deferral of principal and interest for up to 6 months, which may not expire later than 12/31/2020.
2. • Mechanism No. 2 - deferral of principal for up to 6 months, which cannot expire later than 12/31/2020.
3. • Mechanism # 3 applicable to revolving products,. which may not expire later than 12/31/2020.
No fees are charged for renegotiating these mechanisms !!!!
The respective mechanism will be chosen by mutual agreement between the banks and their clients.
/ Please note that Banks are not formally required to comply with this deadline. /
Banks may negotiate with their customers other individual deferral or relief schemes other than those provided for in this order. In such cases, banks will not be able to benefit from the provisional principle introduced by the established moratorium that deferral or relief does not lead to reclassification of exposures in the form of restructuring or default.
The settled deferral and settlement rules apply to customers who cumulatively meet the following conditions:
1.1. Borrowers (clients of banks), with the exception of credit institutions having or expecting difficulty in repaying their obligations under the contract concluded with the creditor, in connection with the COVID-19 pandemic and the restrictions imposed by the Time and Measures Act the state of emergency declared by a decision of the National Assembly of 13.03.2020 and their consequences.
1.2. As of 01.03.2020, the obligations of the clients under item 1.1 are regularly serviced or with a delay not exceeding 90 days.
1.3. Customers expressly wish to avail themselves of the facilities offered by the creditor.
The deadline for submitting a loan deferral request from the borrower is 22.06. 2020 , and the bank by 30.06.2020g. is obliged to respond.
In its request for deferral, at the request of some banks, the borrower is required to submit the following documents to prove the need:
1. In case of termination of employment - ORDER FOR TERMINATION OF LABOR AFTER 01.03.2020.
2. In case of reduced workload - additional agreement on new contractual terms with the employer
3. If the reason is a health document that he was ill with COVID-19 or that he was ill.
4. Documents for legal entities - financial statements as of March 2020, monthly declarations for March to May 2020. proof that he has applied for measure 60 of 40 or other relevant documents proving that there is difficulty in paying the loan
5. It is important for the person to indicate the deferral period, which may not be more than 6 months.
6. In addition to the general statements of the banks, there are specific other statements that the client needs to sign in order to be considered valid by his / her request / not at all banks /. Such additional documents from the bank are: for example a bank's permission statement for reference on its creditworthiness; undertaking the obligation to sign an annex; that it is with the knowledge of other consenting persons; Failure to do so will be considered a default; The client declares that he is eligible and it is a problem for him to pay
Deferral is, in essence, a change of contract and an annex to the contract previously signed between the parties is required. If the customer subsequently withdraws from the proposed grace period, it is considered that the conditions of the signed annex cannot continue to operate and for this reason the bank determines another payment method with a new annex.
Attorney at law Iuila Danova
#3, Dobrotica Str., Varna, Bulgaria
Mob: +359 895 64 59 40
WWW: advokatvarna.com
Email: iulia.danova@abv.bg