A loan repayment holiday – The Shield legislation brings relief for borrowers
The latest package of legislation intended to counter the effects of the Covid-19 epidemic, the Anti-Crisis Shield 4.0, has been approved by the lower chamber of Polish parliament and will now proceed to the Senate. It focuses on individuals who lost their jobs or their principal source of income after 13 March 2020. In one point worth highlighting, in situations where the parties to the loan agreement include more than one borrower, recourse to the Shield protections becomes available already if the loss of employment or income affects one borrower only.
The Anti-Crisis Shield 4.0 enables distressed borrowers to suspend repayment of consumer loans, mortgages, and credit facilities within the meaning of art. 69 of the Polish Banking Law, principal and interest alike, in accordance with the following terms:
- The repayment holidays shall be available for credit facility agreements executed before 13 March 2020, provided that the credit period stipulated therein runs for at least 6 months from 13 March 2020;
- Suspension of repayments for 1 to 3 months shall be automatic upon presentation to the lender of an appropriate application stored by the borrower to a permanent carrier;
- With 14 days following delivery of the application, the lender shall confirm receipt thereof (likewise on a permanent carrier) and confirm to the borrower the period for which performance of the loan agreement is being suspended and the insurance fees; if no such confirmation is forthcoming, performance of the loan agreement shall be suspended anyway;
- The loan period, and likewise any other periods and deadlines specified in the loan agreement, shall be duly extended / moved back so as to account for the suspension (between 1 and 3 months);
- Within the suspension period, i.e. within up to 3 months, the lender ma not charge / collect any other fees except premiums towards any insurance associated with the loan agreement;
- A borrower who has several credit facilities with a number of different lenders may avail himself of the repayment holiday in every such case, vis a vis every individual lender;
- If, meanwhile, a borrower has a number of loans of the same type with one lender (e.g. two CHF loans from a single bank), the repayment holiday will be available for only one of these loans;
- ... as opposed to a situation where a borrower has a number of loans of different types with one lender (e.g. one mortgage and one consumer loan) – here, the repayment holiday will be available for each one of these loans, as long as they are of a different type.
Partner, radca prawny