Bank and Collection Agency Calls to Debtors and Their Impact on the Statute of Limitations

Banks and collection agencies frequently use persistent phone calls to pressure debtors into repaying their debts. However, can a telephone conversation serve as sufficient proof to interrupt the statute of limitations on a debt? Is a phone call enough for a bank to claim a debt indefinitely, even decades later?

Legislation on the statute of limitations is based on the principle of ensuring transactional security by taking into account the creditor’s inactivity. A creditor must act within a reasonable timeframe; otherwise, the debtor is entitled to assume that the claim will not be pursued and should not be indefinitely threatened with enforcement.

Legal Framework and Interpretation

According to Article 260 of the Greek Civil Code, the statute of limitations may be interrupted if the debtor acknowledges the claim. This acknowledgment does not need to be in writing, unlike the abstract acknowledgment of debt under Article 873 of the Greek Civil Code, which requires written form. Instead, any act by the debtor directed at the creditor that clearly demonstrates recognition of the claim’s existence is sufficient.

However, the acknowledgment must be clear and indisputable, creating a reasonable belief for the creditor that judicial action is unnecessary. A debtor’s failure to respond to a creditor’s demand does not constitute acknowledgment.

A critical question in practice is whether an entry in a bank’s internal log regarding a phone conversation with the debtor can be considered sufficient evidence to interrupt the statute of limitations.

Is a Bank’s Reference to a Phone Call Enough to Establish Acknowledgment?

A phone call from the bank many years after the debt was incurred, along with any response from the debtor during this communication, is not sufficient to reasonably lead the bank to believe that judicial enforcement of the claim is unnecessary. The absence of a reasonable belief in the necessity of legal action is further reinforced by the banks’ standard practice of issuing formal demands and immediately initiating enforcement proceedings, often requiring excessive lump-sum payments to reinstate a debt into a repayment plan.

Given this standard practice, a bank’s decision to limit itself to a single phone call without pursuing further action may be due to other considerations, such as: a) The absence of assets with a value corresponding to the debt, or b) The fact that the debt is not of significant value. Thus, the decision not to seek legal enforcement stems from other factors rather than an acknowledgment of the debt by the debtor.

Furthermore, a mere phone call from the bank, without retaining a record of the conversation’s content or taking any subsequent action, is insufficient to establish that the debtor made a declaration of intent acknowledging the debt.

Accepting such an interpretation would unduly expand the grounds for interrupting the statute of limitations. Creditors have various legitimate ways to achieve this interruption, and allowing mere phone calls to suffice would unjustifiably prevent the statute of limitations from taking effect, even when the debtor has justifiably assumed that the creditor is no longer seriously interested in pursuing the claim.

Court Decision No. 7117/2020 of the Athens Court of Appeals

This issue was examined in Decision No. 7117/2020 of the Athens Court of Appeals (8th Single-Member Section) in a case handled by our law firm. The court overturned a first-instance decision that had ruled the statute of limitations had been interrupted by the debtor’s acknowledgment, based on an entry in the bank’s internal log of a phone call.

The appellate court correctly held that such a log entry, based solely on a phone call initiated by the bank and supported only by a sworn affidavit from a bank employee, did not constitute a clear declaration of intent by the debtor toward the bank acknowledging the claim. Consequently, the bank could not assume that judicial enforcement of the claim was unnecessary.

The court ruled that the claim was time-barred and ordered the removal of mortgages from the debtor’s property.