A particularly important development for thousands of over-indebted households is the publication of the decision of the full Plenary of the Supreme Court , which definitively clarifies the method of calculating interest on “bad loans” that have been included in the Katselis law .
The decision is considered a landmark one, as it vindicates borrowers and puts an end to a years-long legal battle with debt management companies (servicers) , which argued that interest should be calculated on the total amount of the debt. The Supreme Court ruled, by a large majority of 35 votes to 12 , that interest should be calculated only on the monthly installment determined by the court and not on the total debt, thus preventing additional charges that led to a sharp increase in debts.
This decision concerns approximately 350,000 borrowers who have been subject to the protective provisions and binds both banks and investment funds . Until now, in several cases, servicers calculated the interest on the entire outstanding debt, resulting in many debtors seeing their monthly payments increase, despite the fact that they had achieved a court settlement.
The case reached the Supreme Court following a preliminary question submitted by the Ioannina Court of Justice , in order to bridge the conflicting decisions of the lower courts. With this new judgment, which was aligned with the proposal of Vice President Sotiris Plastiras , legal uncertainty ceases to exist, creating a unified case law that offers legal certainty and substantial relief to over-indebted households.
