New €5,000 threshold for out-of-court debt settlement takes effect on 27 July

The change is introduced under Law 5313/2026 and represents one of the government’s most significant interventions in the area of private debt management, reducing by 50% the minimum debt threshold required for eligibility under the Out-of-Court Debt Settlement Mechanism. Until now, only debtors with total outstanding liabilities exceeding €10,000 were eligible to participate.

Broader eligibility

Under the new framework, thousands of households, sole traders, and self-employed professionals with total debts of €5,000 or more will now be eligible to access the Out-of-Court Debt Settlement Mechanism.

Eligible liabilities may include debts owed to the Independent Authority for Public Revenue (AADE), the e-EFKA social security fund through the Centre for the Collection of Social Security Debts (KEAO), as well as obligations to banks and loan servicing companies (funds), enabling debtors to address all outstanding liabilities through a single restructuring process.

According to the Ministry of National Economy and Finance, the reform is expected to substantially expand the pool of potential beneficiaries by including a large number of small-scale debtors who had previously been excluded from the mechanism.

Key benefits of the reform

Participation in the Out-of-Court Debt Settlement Mechanism offers several important advantages for debtors.

Upon the formal submission of an application, the statutory protection against enforcement measures is activated. Outstanding debts may then be repaid in up to 240 monthly instalments for obligations to the State and up to 420 monthly instalments for debts owed to financial institutions.

In addition, where applicants meet the applicable income and asset criteria, the restructuring proposal may include the partial write-off of penalties and surcharges or, in certain cases, even part of the principal debt.

Eligibility requirements

The new minimum threshold for participation is set at €5,000 in total outstanding debt. Debts below this amount remain ineligible for the Out-of-Court Mechanism and must continue to be settled through the available tax authority or social security repayment schemes.

The minimum monthly instalment under the mechanism is €50.

It should be noted that neither the number of instalments nor the repayment terms are chosen by the debtor. Instead, they are determined automatically by the platform’s algorithm, based on the applicant’s income, assets, and overall financial profile.

Accordingly, applicants must consent to the verification and cross-checking of their financial information as a prerequisite for submitting an application.

Addressing small-scale private debt

The reduction of the eligibility threshold is intended to address a significant gap in the existing framework by allowing debtors with relatively modest liabilities to access a structured debt restructuring process before their obligations result in enforcement actions.

The expansion of the Out-of-Court Debt Settlement Mechanism is expected to lead to a significant increase in applications over the coming months, as eligibility will now extend to a much larger share of individuals and small businesses facing difficulties in servicing their debts.