Debt settlement in 2026: the complete guide for banks, funds, the tax authority and social security

The four settlement routes in 2026

These routes are not mutually exclusive. In many cases the right combination is: audit the debt first, negotiate bilaterally on the bank side, and use the standing arrangement for tax and social security — or the reverse, a single solution through the out-of-court mechanism when the public-debt side is large.

• Out-of-court mechanism (Law 4738/2020): a single settlement covering banks, servicers, the tax authority and e-EFKA through one electronic application.
• Standing AADE / e-EFKA arrangement: public debts only, no principal write-off, relatively fast activation.
• Bilateral negotiation with a bank or servicer: outside the platform, with more flexibility on haircuts and repayment structure.
• Banking mediation / out-of-court dispute resolution: where the amount of the debt, interest or charges is disputed.

When the out-of-court mechanism fits

The out-of-court mechanism is the strongest option when debts are split between private and public creditors, because it is the only mechanism that binds them simultaneously into one solution. It allows up to 240 installments for the State and Social Security Funds and up to 420 installments for banks and servicers.

The application is filed on the platform of the Special Secretariat for Private Debt Management, with a waiver of tax and bank secrecy. The proposal is generated algorithmically from income, assets and total debt — which is exactly why the quality of the data the platform "sees" determines the outcome.

• Fits when: there are multiple creditors, documented income, and the debtor wants one legally protected solution.
• Does not fit when: income is not reflected in tax filings, or when a targeted bilateral agreement can achieve a larger write-off.

Standing AADE and e-EFKA arrangements

For debts owed exclusively to the State, the standing arrangement is the fastest route. It provides no principal write-off; it spreads the debt into installments and suspends enforcement measures as long as it is honoured. It is activated electronically, typically within days.

The critical point is consistency: losing the arrangement restores the full debt with surcharges and unlocks seizures and account freezes again.

Bilateral negotiation with a bank or servicer

Outside the platform, a servicer has discretion to write off interest and part of the principal, particularly where the loan was acquired well below face value. Preparation decides the outcome: a documented income picture, a realistic installment proposal, and a clear alternative for the creditor if no agreement is reached.

In one of our office's cases, a property held in usufruct by the mother and bare ownership by two adult children was heading to auction over a €135,000 debt on a €238,000 loan. Bilateral negotiation with the fund achieved a 40% write-off, a minimal down payment and a sustainable monthly installment for the family.

• Always request a detailed debt statement and interest history before discussing figures.
• Do not propose an installment you will "try" to pay — propose one that holds in a bad month.
• Confirm every verbal agreement in writing before paying any amount.

Auditing the debt before any settlement

Before anything is settled, we check whether the amount demanded is correct. In practice we find compound-interest errors, charges outside the contract, wrongly applied default interest, and costs that follow from no contractual term at all.

A 5% error on a €200,000 debt is €10,000 paid for nothing over twenty years. The audit always comes first, because after a settlement is signed the dispute becomes far harder to raise.

Primary residence protection and vulnerable debtors

The law provides special treatment for "vulnerable debtors", with income and asset criteria linked to the housing benefit and adjusted by ministerial decision. This category has additional tools for protecting the primary residence, including transfer and lease-back with a repurchase right.

Because the thresholds change, the first thing we examine is whether the criteria are met under today's amounts — not last year's.

Documents you will need

• Taxisnet credentials and consent to waive tax and bank secrecy.
• E1, E2, E3, E9 filings, tax assessments and ENFIA for recent years.
• Debt certificates from AADE and e-EFKA.
• Detailed loan statements and full correspondence with banks or servicers.
• Collateral details: prenotations, mortgages, third-party guarantees.
• For businesses: balance sheets, cash flows, supplier ledger.

Five mistakes that sink cases

• Filing an application without first auditing the amount of the debt.
• Declaring an installment that cannot be carried — the settlement is lost within months.
• Omitting a creditor or an asset, leading to rejection or reversal.
• Delaying once an auction date has been set — the deadlines are strict.
• Ignoring the position of guarantors, who remain liable if they are not properly included.

Practical conclusion

The correct sequence is fixed: audit the debt, map the creditors, calculate the real installment capacity, choose the route — and only then submit. Those who start with submission usually start again from scratch a year later.

If you want a quick view of whether you meet the out-of-court criteria, use our free eligibility check and treat the result as the starting point of the conversation.