Greece overhauls private debt management with new measures

Greece's Ministry of National Economy and Finance has introduced a comprehensive new framework to address private debt, encompassing updated judicial settlement procedures, enhanced out-of-court resolution options, and revised payment plans for public debts. This package of measures, recently passed by Parliament, aims to provide significant relief to individuals and businesses struggling with financial obligations.

The reforms target an estimated two million households grappling with debts accumulated during the pandemic and the recent energy crisis. The new provisions aim to offer debt reduction, extended payment schedules, and crucial protection against property foreclosures. Key legislative changes include modifications to the existing 'Katselis Law,' which governs judicial debt settlements, and the out-of-court debt resolution mechanism.

“

Private debt is perhaps the most complex social footprint of the crisis. It is measured in insecurity, in delayed life decisions, in people who feel that the past continues to define their future.

Minister of National Economy and Finance, Kyriakos Pierrakakis, described private debt as a complex social consequence of past crises, leading to insecurity and hindering life decisions. "Our job is to break this vicious cycle with solutions that create real second chances," Pierrakakis stated in a declaration to APE-MPE. He emphasized that the government's interventions aim to reduce burdens, restore opportunities, and provide a renewed sense of control over their lives for citizens, viewing this as the most substantive form of progress for society.

A central focus of the new framework is the amendment of judicial debt settlement procedures under Law 3869/2010, commonly known as the 'Katselis Law.' A new provision, Article 126, clarifies that interest on debts regulated by court decisions will now be calculated solely on the monthly installment amount, not the total outstanding balance. This change effectively minimizes interest accrual, addressing a long-standing ambiguity in the original law and providing immediate relief by reducing current monthly payments for debtors.

“

Our job is to break this vicious cycle with solutions that create real second chances. Every intervention we make for private debt serves the obligation to reduce burdens, restore opportunities, and give back a horizon. The real success of economic policy is measured by the number of citizens who feel they are regaining control of their lives. And this is, ultimately, the most substantial form of progress for society.