The new bill from the Ministry of Finance, expected to be tabled in Parliament this week, brings broader access to debt settlement for more households, more debtors, and with significantly increased protection.

This is the first reform package introduced by Kyriakos Pierrakakis as Minister of National Economy and Finance, aiming to radically expand the scope of the out-of-court debt settlement mechanism and offer a genuine second chance to those at risk of losing their property.

Major Reform: Automatic Settlement Without Lender Approval

The most important change is that thousands of debtors will now be able to enter settlement without needing approval from banks or the state. This is made possible by raising the income and asset thresholds that trigger what’s known as presumed consent.

• For single-person households, the new income limit is €14,000.
• For two-person households, €21,000.
• For five-person households, €42,000.
• Property value thresholds can go up to €360,000.

With these new criteria, the mechanism opens up to tens of thousands of households that were previously excluded. For those meeting the new requirements, settlements are approved automatically without needing lender consent. The cap on non-performing loans eligible for inclusion is also raised to €300,000, covering significantly higher debt amounts.

Deadline Removed: Apply Up to 20 Days Before Foreclosure

Another key improvement is the abolition of the 60-day deadline from the date of seizure. Now, applications for protection can be submitted up to 20 days before the foreclosure. This change supports thousands of debtors who previously missed their chance at settlement simply due to bureaucratic timelines. The Ministry aims to eliminate this barrier and offer real time for action.

Creditors Now Obliged to Propose Settlements

From now on, creditors will be required to send a settlement proposal at least three months before any foreclosure. It is no longer enough to just notify the debtor of seizure or auction dates—they must provide a written proposal with specific repayment terms. This can even be sent by email. This means settlement proposals must now come before foreclosure, not after.

Vulnerable Debtors Exempt from Down Payments

Another critical change: vulnerable debtors will be completely exempt from down payments. For others, a deposit of up to 10% of the settlement may be required. But low-income households, people with disabilities, and those with dependent children can now enter the process without paying anything upfront, removing a major obstacle that had previously excluded the most financially at-risk.

Debt Write-Off for Assetless Citizens

The new law also offers a final solution for citizens with no assets. If someone does not even have the minimum required to start bankruptcy proceedings, they will no longer be forced to go through court. Instead, they will be automatically entered into the National Insolvency Register and relieved of their debts, with no further steps required.

A Growing Mechanism

These changes come as the out-of-court mechanism sees a significant surge. In 2024, 28,945 successful settlements were recorded—an 81% increase over 2023—with total restructured debts exceeding €9.5 billion. Business debt settlements increased by 45% within a single year.