Two major new interventions are set to transform how private debt is managed in Greece, introducing a fixed 3% interest rate for debts restructured through the Out-of-Court Debt Settlement Mechanism and allowing the repayment of old tax debts and social security arrears in up to 120 monthly installments. The measures are designed to ease the financial burden on households and businesses struggling with debt, offering longer repayment periods and more favorable servicing terms.
The changes are included in the private debt bill put forward by the Ministry of National Economy and Finance, which was passed by the Greek Parliament on Thursday, November 5. The legislation also introduces stricter penalties for debt servicer companies, with the Bank of Greece’s maximum supervisory fine increasing from €500,000 to €5 million.
Out-of-court settlement mechanism: Fixed 3% interest rate from December 1
The first key measure introduces a fixed 3% interest rate on debts restructured through the Out-of-Court Debt Settlement Mechanism, applicable to vulnerable borrowers and eligible debtors.
The new framework is set to apply to payments from December 1, 2026, offering greater predictability in terms of the cost of servicing restructured debts.
The financial relief could be substantial. As an example, for a debt of €100,000 with a 20-year repayment period, the saving is estimated at approximately €20,200 for a secured claim and €28,600 for an unsecured one.
Under the previous regime, after the first three years of the arrangement, the interest rate could rise to 5.17% for secured claims and 5.57% for unsecured ones.
Also noteworthy is the expansion of eligibility for the Out-of-Court Mechanism, with the minimum debt threshold now set at €5,000, allowing more debtors to access the process.
Key benefits for debtors
Beyond the fixed interest rate, the Out-of-Court Debt Settlement Mechanism offers long-term restructuring options as well as protection from enforcement measures, subject to the conditions set out in the legislation.
Specifically, the framework provides for:
Suspension of enforcement actions, in accordance with the legal conditions and exceptions of the process.
Repayment in up to 240 installments for debts owed to the state and up to 420 installments for debts owed to banks and debt management companies.
The possibility of partial debt write-offs, including surcharges and, in certain cases, the principal amount, provided the relevant income and asset criteria are met.
The final restructuring proposal is tailored to the debtor’s financial profile and the rules of the mechanism.
The 120-installment plan: Which old debts qualify
The second major intervention allows old debts to be repaid in up to 120 monthly installments, up from the 72 installments permitted under the previous framework.
The new platform operated by Greece’s Independent Authority for Public Revenue (AADE) is expected to go live in mid-November, with the application deadline set for June 30, 2027.
According to estimates accompanying the measure, more than one million debtors — including households and businesses — could take advantage of the new framework to settle their outstanding obligations.
The minimum monthly payment is set at €30, and the repayment period can extend up to ten years.
The plan covers confirmed debts to the Tax Administration that became overdue on or before December 31, 2024, provided they were not under an active repayment arrangement as of September 30, 2026.
There is also an option to transfer existing debts from the previous 72-installment plan into the new 120-installment scheme, as long as the existing arrangement is still being honored.
Eligibility requirements for the 120-installment plan
To benefit from the new arrangement, applicants must meet specific criteria.
Among other requirements, they must:
- Have settled, within one month of enrollment, any debts that arose from January 1, 2025 onward.
- Have filed income tax returns for the last five years, where the submission deadline fell on or before December 31, 2025.
- Not have been subject to a final conviction for tax evasion or smuggling.
- Make monthly installment payments on time and avoid accumulating new unresolved debts.
- Be aware that the arrangement may be forfeited if two consecutive installments go unpaid or if new overdue obligations arise without being settled.
When seizures and collection measures are suspended
One of the most significant benefits for those enrolled in the 120-installment plan who comply with its terms is protection from enforcement and debt collection measures.
Specifically, the legislation provides for the suspension of criminal prosecution for failure to pay debts to the state, as well as the suspension of compulsory collection measures, in accordance with the conditions of the new framework.
Compliant debtors can also obtain a tax clearance certificate under the applicable terms, while in certain cases, provisions are made for the release of future claims subject to third-party seizure orders.
Through these two interventions, the government’s economic team aims to broaden private debt restructuring options, reduce repayment costs for eligible borrowers, and give households and businesses more time to clear their outstanding obligations.
