The new, enhanced framework for protecting primary residences through the Out-of-Court Debt Settlement Mechanism comes into full effect today, September 21, 2026. The new regulation responds to the long-standing demand from citizens for stronger primary residence protection, while simultaneously introducing greater flexibility for hundreds of thousands of debtors.
Out-of-court debt settlement: How your primary residence is protected
Specifically, borrowers now have the option, when submitting their application on the out-of-court mechanism’s online platform, to request debt restructuring with protection for their primary residence — separating it from the rest of their real estate holdings. Under the new, streamlined restructuring process, they can secure greater debt write-offs and lower monthly payments, since only the value of the primary residence is taken into account when calculating the settlement terms. In return, the debtor agrees to the voluntary liquidation of their remaining assets through a simplified auction process.
For vulnerable and eligible debtors in particular, creditors are required to submit this specific alternative settlement proposal — one that includes saving the primary residence while liquidating other properties. In all cases, the debtor may accept or reject this counter-proposal. If rejected, the debtor will receive the standard out-of-court proposal, without any forced sale of other properties.
Once the restructuring agreement is formally signed, any forced enforcement action, auction proceedings, or interim measures against the debtor’s primary residence are explicitly prohibited, provided that the debtor complies with the agreed terms. Furthermore, the agreement itself carries the force of an enforceable title, ensuring a swift, transparent, and fully consensual process for all parties involved.
The new regulation permanently and effectively safeguards citizens’ primary residences. At a time when financial challenges demand immediate and fair solutions, the new framework balances social sensitivity with realistic debt resolution. It gives hundreds of thousands of borrowers a solid second chance to sustainably restructure their debts — without the fear of losing their home.
Settlement example
A debtor with total outstanding debts of €300,000 and a primary residence valued at €150,000 submits an application on the out-of-court platform, declaring that they wish to protect exclusively their primary residence, while consenting to the liquidation of their remaining properties, with a combined value of €50,000.
Debtor’s steps under the new process
- Submits an application on the out-of-court platform, declaring their intention to enroll in the primary residence protection program.
- The platform automatically separates the primary residence, valued at €150,000, from the remaining properties.
- Enrollment in the settlement implies consent to the liquidation of other properties valued at €50,000.
- The settlement is calculated solely based on the value of the primary residence.
Step 1: Calculating the new debt (based solely on the primary residence)
Under the new framework, the settlement is based exclusively on the value of the primary residence:
New calculation base = €150,000
Creditors are required to propose a settlement that:
- protects the primary residence
- liquidates the remaining properties
- reduces the debt to a sustainable level
Debt write-off:
Original debt: €300,000
Value of other properties: €50,000 (liquidated)
Write-off generated by the algorithm: €150,000
Creditor satisfaction from liquidation of other properties: €50,000
Remaining debt to be restructured: €150,000
Step 2 — New monthly payment
The remaining restructured debt of €150,000 is repaid over up to 35 years, depending on the debtor’s income situation.
Step 3 — Primary residence protection
Upon signing the agreement:
- Auction of the primary residence is prohibited for all creditors participating in the out-of-court settlement (banks, servicers, the state, and social security bodies)
- The agreement carries the force of an enforceable title
- The debtor is permanently protected, as long as they comply with the settlement terms
Under the new framework:
- The debtor keeps their home
- The debt is cut in half — from €300,000 to €150,000
- Monthly payments become manageable
- The process is consensual and fast
