The Law no. 77/2016 regarding giving in payment (darea în plată) of certain real properties to extinguish obligations assumed through credit contracts underwent a series of consumer-friendly changes through adoption of Law no. 52/2020, especially so its provisions align with decisions of the Constitutional Court in this domain.
Among the main amendments are the express stipulation of two absolute presumptive cases of hardship (impreviziune), per the unique article point 2 of Law no. 52/2020. Therefore, the debtor must prove that they are in one of these two hardship situations as revised, to reach termination of the credit contract and extinguishment of their obligations.
- Hardship is considered if, during execution of the credit contract, the exchange rate applicable for purchasing the currency of the credit registers, at the date of sending the giving-in-payment notice, an increase of over 52.6 % compared to the date of conclusion of the contract.
For debtors to rely on this presumption, several cumulative conditions must be met:
- The credit contract must still be in execution.
- The applicable foreign exchange rate must have increased over 52.6 % relative to the contract’s original execution date.
- That increase must be recorded on the date of sending the giving-in-payment notice.
- Hardship is also presumed if, during execution, the monthly payment obligation increases by over 50 % due to rise in variable interest.
- This second case applies when the contractual interest varies according to bank credit policy or indices (e.g. ROBOR, EURIBOR, LIBOR, etc.).
These conditions can be met for credits in CHF or in EUR.
An additional condition, common to both presumed hardship cases, is maintenance of those threshold values (exchange rate increase beyond 52.6 % or monthly rate increase beyond 50 %) in the 6 months preceding the sending of the giving-in-payment notice. Because these presumptions are absolute, the bank cannot disprove them; the judge is obligated to approve the giving in payment if conditions are satisfied.
The bank may only attempt to prove non-fulfillment of the admissibility conditions of the notice, per Article 4, paragraph 1, letters a–d of Law 77/2016, namely:
- Creditor and consumer must belong to the categories in Article 1(1).
- The loan amount at origination should not have exceeded the lei equivalent of €250,000.
- The credit must have been contracted by a consumer for acquisition, construction, extension, modernization, arrangement, or rehabilitation of a dwelling, or be secured by at least one dwelling property.
- The consumer must not have been irrevocably convicted for offenses related to that credit.
A beneficial amendment is that burden of proving admissibility conditions now lies exclusively with the bank. Therefore, if the bank contests the giving-in-payment notice, it must prove that those admissibility conditions are met, or else its contestation is dismissed.
Another change through Law 52/2020 is that during the period of the giving-in-payment notice, and while creditor requests under Articles 7 and 8 of Law 77/2016 are being resolved, the debtor may not be registered in credit bureau or negative debtor databases as a high-risk or bad payer.
Importantly, until final resolution of the bank’s contestation regarding admissibility conditions, all enforcement actions are suspended, including garnishments. Also during that period, the debtor is exempt from making payments to the bank, or any other judicial or extrajudicial enforcement actions by the creditor or successors (e.g. debt-collection companies).
At Article 7 of Law 77/2016 a provision was added, favorable to debtors, prohibiting the bank from demanding late payment penalties or damages if the bank’s contestation is admitted in a final decision. However, the debtor remains bound to pay if it is shown that it acted in bad faith when submitting the giving-in-payment notice.
Finally, Law 52/2020 expressly provides that debtors already subjected to foreclosure through auction of their mortgaged property may still give in payment, even if they no longer own it. If the auction price did not fully cover the debt and the debtor continues under enforcement for remaining principal or accessories, regardless of the stage of enforcement or holder of the claim, the debtor has the right to issue a giving-in-payment notice. In that scenario, any remaining debt is forgiven.
The possibility to request contract adaptation by freezing the exchange rate remains. Moreover, the court is obliged to order contract adaptation when giving in payment and full extinguishment of the debt is considered overly severe.
The Constitutionality of Law 77/2016 as amended by Law 52/2020 was confirmed by Constitutional Court Decision no. 431/2021, which mandates that judges must prioritize contract adaptation, regardless of the procedural path chosen by consumer to benefit from giving-in-payment effects.
As a result, in future debtors are not required to pursue property transfer of the mortgaged asset to the bank: it suffices to express the desire for contract adaptation. This allows borrowers to negotiate exchange rate terms with banks; if no agreement is reached, courts will impose a rate favorable to consumers.