Μake us preferred on Google A major change is coming Sept. 21 for millions of individuals and businesses in Greece facing debts to the tax authorities, social security funds, banks and loan servicers.
The country’s out-of-court debt settlement mechanism is one of the main tools available for restructuring debts. The new provisions could significantly affect both the number of installments borrowers can receive and the amount they ultimately have to repay.
According to tax specialist Athanasia Stolaki, speaking to Greece’s public broadcaster ERT, more than 4 million tax identification numbers (AFMs) belonging to individuals and legal entities have outstanding debts to the state. Tax debts alone are approaching €114 billion.
At the same time, debts to social security funds and the Center for the Collection of Social Security Debts (KEAO) amount to approximately €52.4 billion, while loans managed by servicers total around €80 billion.
Existing debt repayment options
For taxpayers with debts to the tax authorities, the standard repayment arrangement remains available. It allows debts to be paid in up to 24 installments, while certain exceptional debts can be repaid in up to 48 installments.
These exceptional debts include, among others, liabilities arising from court decisions, inheritances and tax audits. The minimum monthly payment is €30.
Until the end of the year, on Dec. 31, eligible borrowers can also use a 72-installment arrangement for certain older debts. This option applies to debts that became overdue by Dec. 31, 2023.
Borrowers with both older debts and new liabilities incurred after 2023 may, subject to the applicable conditions, use different repayment arrangements for each category of debt.
Up to 240 installments for state debts
The out-of-court mechanism is particularly important for borrowers who owe money to more than one type of creditor.
It allows debts to the state, social security funds, banks and loan servicers to be addressed through a single restructuring process.
Repayment can extend to as many as 240 installments for debts to the state and social security funds. For debts owed to banks and servicers, the period can reach up to 420 installments.
A basic requirement is that total debts exceed €5,000.
Depending on the borrower’s financial and asset situation, the arrangement can also result in a reduction of part of the debt.
What changes for primary residences
A significant change to the out-of-court mechanism is expected to take effect Sept. 21.
Under the new provision, borrowers will be able to exclude their primary residence from the assets considered when calculating their debt restructuring, according to information presented on the program.
Until now, the borrower’s overall assets have been taken into account when assessing their financial position. This can include, for example, a primary residence as well as a vacation home or another property.
Under the new option, borrowers will be able to choose to preserve their primary residence, while other assets may be treated differently as part of the restructuring process.
A lower value for the assets included in the calculation could, depending on the individual case, result in more installments and potentially a larger reduction in the debt.
