It was signed by the Ministers of National Economy and Finance Kostis Hatzidakis and Development Kostas Skrekasthe Joint Ministerial Decision which significantly improves the algorithm of the extrajudicial mechanism.

In particular, with the changes that are taking place, the amount of debt limitation (“haircut”) in collateralized loans is improved by up to 28% compared to the existing situation.

With the same decision, the interest rate for all debt arrangements to the State, Banks and debt management companies is set at 3% fixed for 3 years.

It is noted that the interest rate for debts to financial institutions was until now euribor plus 2.5 points for secured debts and plus 3 points for unsecured debts. For debt settlements to the State and Social Security Agencies it was already fixed at 3% fixed.

The introduction of the relevant amendments to the platform of the extrajudicial mechanism is already underway and will be completed within the next few days (a later announcement will be issued for the exact date).

Moreover, with a Joint Ministerial Decision of the Ministers of National Economy and Finance Kostis Hatzidakis and Labor and Social Security Domnas Michailidou the possibility of joining the extrajudicial mechanism is given to persons who “inherited” debts to the State and Social Security Agencies, from companies that have closed.

In relation to the extrajudicial, it is recalled that Law 5072/2023 “Loans: Transparency, competition, protection of the vulnerable” also provides that:

  • The proposal to restructure the debt of vulnerable debtors, as it results from the application of the out-of-court algorithm, will be automatically and mandatorily accepted by all creditors (banks and the State).
  • The debtor reserves the right to reject this proposal.
  • Creditors can challenge it in court only if they have evidence that parameters of the application are not true.

It is noted that by December 2023, 12,025 successful debt settlements were carried out through the extrajudicial system, totaling 4.36 billion euros with an average repayment period of 17 years for debts to the State and 18 years to banks – financial institutions. The average debt reduction is 17.13% for the State and 27% for the banks – financial institutions.

According to the provisions of the same law (5072/2023), the activation of the special digital platform to inform borrowers by the servicers follows until March 31, 2024.

In particular, the servicers are obliged to provide, through a digital platform, personalized and detailed information to the debtors, about the amount of the debt, the history of payments, installments, the interest rate of the arrangement, etc.

The debtor will be able to see these details by logging in using his password in a special application on the servicers’ websites (by analogy with the banks’ web banking).

Penalties for violators include fines of up to 500,000 euros, an obligation to correct the violation, and even revocation of the operating license.