Out-of-court debt relief mechanism: a practical guide

What the mechanism actually is

It is a digital, out-of-court procedure: the debtor submits an application, waives tax and bank secrecy, and the platform automatically pulls data from AADE (tax authority), e-EFKA (social security) and financial institutions. A settlement proposal is then generated by an algorithm that considers income, assets and total debt.

The mechanism replaced the earlier framework of Law 4469/2017 and has been amended multiple times since its enactment. Therefore, before any submission, we check which version of the provisions and ministerial decisions applies at the specific time.

Installments and key rules

The maximum installment limits don't mean you'll automatically get the maximum. The final program depends on the debtor's age, property value, type of security, and expected income.

• Debts to the State and Social Security Funds are settled in up to 240 monthly installments.
• Debts to financial institutions (banks, servicers) are settled in up to 420 monthly installments.
• For the multilateral procedure to be considered successful, the consent of creditors representing the majority percentages of claims specified by law is required — with enhanced weight for secured creditors.
• The settlement requires viability: the installment must be sustainable from real disposable income, not optimistic projections.
• Missing a specific number of installments results in loss of the arrangement and revival of the original debts.

Vulnerable debtors

The law provides special treatment for 'vulnerable debtors' — those meeting income and asset criteria set by ministerial decisions and linked to the housing allowance criteria. This category provides additional tools for protecting the primary residence, such as the possibility of transferring and leasing it back through the designated intermediary, with a right of repurchase.

Because the thresholds are adjusted, the first thing we check is whether you meet the criteria with current amounts — not those that applied last year.

What the file requires

• Taxisnet codes and consent to lift tax/bank secrecy.
• Tax clearances and E1/E2/E3, E9 and ENFIA property tax forms.
• Debt certificates from AADE and e-EFKA.
• Detailed loan statements and correspondence with banks/servicers.
• Security details (mortgages, pledges, third-party guarantees).
• For businesses: balance sheets or E3 for recent years, supplier list, cash flow projections.

Where cases are lost

The number one cause of rejection or unfavorable proposals is an incomplete or inaccurate file. The second cause is submitting without a simulation: the debtor commits to an installment they can't afford and loses the arrangement within months.

The third cause is choosing the wrong path. The out-of-court mechanism isn't always the optimal solution: bilateral negotiation, banking mediation, or — where conditions are met — the second chance procedures of the same law may yield better results.

Practical conclusion

Before clicking 'submit,' a complete mapping of your situation and a result simulation are worthwhile. That way you know in advance what installment will result, whether it benefits you, and what the alternative scenario is if the proposal is rejected.