It changes the landscape of debts to the State, to the Red loans, the frozen accounts and the protection of the first residence. As of this month the new grid of measures of the Ministry of National Economy and Finance has been activated giving real breath to thousands of households, but also an opportunity to restart for small and medium-sized enterprises stifling from debt.
The new options now open to debtors are many, but also combination to solve multiple problems. In practice, anyone who has reached a point of overburden usually has not just one open front to face, but many at the same time.
The measures
Thus, although lights fall mainly into the arrangements for 72 installments or red loans and whether they could be even more generous, in practice more important it is that all new measures work together at the same time.
For example:
• with the increase in irrevocable limit at 1,600 euros, as of July and every month they will directly gain liquidity of 350 euros over 1.7 million households and businesses.
• If they do not solve the problem the 4,200 euros they earn in excess of a year, they may be fully relieved of the debts for the IRS by immediately paying off just 1/4 of their debts that had been forced upon them and at the same time putting their remaining debts into regulation to repay them in part.
• if the 24 installments of the fixed arrangement are not sufficient - because they are burdened with many other debts than the past and the monthly payments are large - then they can be subject to 72 instalments in order to pay smaller amounts each month.
• If not all 72 doses are sufficient, they can increase them to 100 or 200, as from the end of July they can join Extrajudicial and over 2 million microfichees that have debts of between 5,000 and 10,000 euros and have to date been excluded from «Haircuts» the 240 or 420 instalments for public or banks respectively.
• for those who have already come to a complete impasse and are hardly able to serve legal arrangements to which they were subjected to save their home, the dose they pay is drastically reduced.
• for those who are one step further and are directly threatened to lose their house at auction, in September they open a new possibility of protecting their main residence through the Extrajudicial Mechanism.
The changes in the Extrajudicial is perhaps the greatest and most permanent intervention the Ministry of National Economy and Finance with the new package: tackles all debts as a whole and not individually by giving a holistic solution to debtors.
Not by chance, the Minister of National Economy and Finance Kyriakos Pierrakakis It now characterizes the Extrajudicial Mechanism «super gun» for the management of private debt, but also announcing new interventions in the near future.
What does it do and who does it do?
The new measures, among which households and businesses are invited to choose which and how to exploit, are now beginning to apply, after the passage of the Ministry of National Economy and Finance's multidisciplinary draft.
Specifically:
1) 72 instalments for old debts
For those who only owe to the State (tax, customs, insurance funds) the first and most immediate exit is 72 installments. The new arrangement concerns outstanding debts created by the end of 2023 and gives more breath than the fixed regulation of 24 installments.
The relief concerns mainly old debts, from the time of the pandemic and the major energy crisis of 2023: the debtor will choose more doses in order to have a much smaller monthly dose. For 18,000 euros in Public, a debtor who currently has to pay around EUR 750 per month with 24 instalments of fixed regulation, will be able to distribute his debt in up to 72 instalments and drop the monthly charge around EUR 250, more than interest.
For an employee with an income of 1,400 or 1,500 euros, this difference is significant. Very often is the difference between «I remain consistent» and in «I'm losing the setting again.».
The same goes for a small business with debts in EXPAS and VAT. Thanks to the ability to break the amount in more instalments, the debtor can keep tax and insurance information, avoiding new seizures.
In any case, 72 doses are adjusted «disposable»The deadline for applications is 31 December 2026, and any other debts which have been incurred since 1 January 2024 are required. Thus 72 installments do what any emergency arrangement promises: it does not solve everything, but gives greater scope to those who have debts to the State to meet other needs.
(2) Fixed accounts
For many professionals the biggest daily problem is not just debt. It's that they can't even work. Money goes in, but the bill's blocked. And without an account there's no business.
Here comes the new possibility of lifting the seizure. If the debtor pays 25% of the debt and settles the balance, he may request that his account be unblocked. This is important for a freelance professional who lives off his receipts.
A dealer with a debt of 20,000 euros, for example, can pay 5,000 euros, regulate the remaining 15,000 euros and request the release of his account. The same applies to a small company that needs to regain liquidity for suppliers, wages and operating costs.
With the problem of tying their money they live every day 1.7 million taxpayers which have already been seized (without counting those who are under compulsory debt recovery measures in LCAs, banks or individuals), while a series of 2,4 million debtors (VAT) are still in the lobby for debts over 500 euros, for which seizures may be imposed – but still have not been implemented.
However, all these debtors will be relieved immediately, as, under another provision, the irrevocable limit on bank accounts, from EUR 1,250 to EUR 1,600, is increased for debts to the State.
An additional 350 euros are released each month. The irrevocable threshold also increases for debts to individuals and banks: from 1,500 to 1,600 euros (such as to the State) but also from 2,000 to 2,200 euros applicable when it comes to joint accounts with more than one beneficiary, ensuring an additional 100-200 euros available monthly income or 1,200 to 2,400 euros additional annually.
3) Extrajudicial: doses and «haircut» debts under EUR 10,000
When debts are not only towards Tax and the Funds, but also relate to banks, cards or loans to servicers, then the Extrajudicial remains the most complete solution «all in one»: a request, a proposal, a comprehensive regulation.
The most important change is that the accession threshold falls from 10,000 to 5,000 euros. This means that it opens a door to over 1 million microfichees, which has remained closed to them until now.
The new option is activated at the end of July. With a minimum of 50 euros a month, a debt to the State will be able to «Haircut» and set in hundreds of installments on a permanent basis – which did not many other extraordinary arrangements in the past.
(4) Residence protection
The most sensitive change involves saving the main residence. For the first time the main residence passes into a separate protection zone within the Extrajudicial. Until now the proposal for a regulation has been defined by the total property, income and total liabilities of the debtor. With the new regime, the house will be much more targeted.
The measure makes the following logic: as in the old Katseli law, the debtor will be able to exclude his main residence from auctioning his property.
The platform of the Extrajudicial - as they used to do Court of Justice– sees what other assets the debtor has and enables him to ask to rescue his home, paying back what he can, with whatever income he has left.
In Extrajudicial matters are better: from September if someone owes a bank 150,000 euros but has, for example, two-three plots, he can, if he wants to rescue his residence (value, e.g., 100,000 euros), choose when he starts applying that he separates the house from the rest of his property.
Then the debt «She's getting a haircut.» at 100,000 euros or less (removing any plots he chooses) and will pay in up to 420 installments (35 years) reducing drastically and in debt and installment, for the additional reason that the Exodicean algorithm will treat him as poorer than it is today, having both home and plots.
(5) The Katseli law is rewritten
The most heavy legacy of Greece's crisis was the large debts it left to those who lost almost everything and are trying to save at least the house they took on loan. They are therefore concerned with the reregulation of Law 3869 of 2010, known as Katseli law.
For those with active judicial arrangements, the way interest is calculated changes immediately. The interest is now placed on the monthly installment rather than on the total balance of the loan. This alone throws the cost of setting spectacularly.
For those who paid more for years than they should in the old way of calculation, the state also gives retroactive correction. The additional amounts are recognised as capital and deducted from the last instalments. Thus, the loan closes earlier and at a lower cost.
What's going on in practice?
Here is a real example: a borrower applied to go to Law 3869 of 2010 to rescue the main residence from auction. The case was tried in 2024. By 2022 he had come to owe 405,000 euros for loans he took and guarantees he gave from 2005 to 2008.
The court ruled that its income (3,600 euros per month in 2008) was sufficient for loan repayments, but since 2011 they decreased while in 2014 he became unemployed.
Seeing that, other than his residence, he did not have any other assets to liquidate (real estates, vehicles, etc.), the court took into account the low incomes of him and his wife and decided to exclude the house from auctioning.
To save it, he imposed on the debtor to pay a debt of 45,000 euros (deleting the remaining 360,000 euros) with 240 instalments for 20 years and a dose of 187.5 euros per month. However, as provided for by the Katseli Act, he set the payment to be made on interest, based on the average weighted housing loan (3.6% per year).
What does it mean?
• By the interest rate method for calculating payments which the ambiguity of the law allowed to apply (i.e. interest on the entire debt at a depth of 20 years) the debtor would pay a tranche of EUR 263 for 240 months. In 20 years he would have paid a total of EUR 63,120, of which EUR 50,000 for his debt and about EUR 13,120 for interest.
• By calculating the interest on the installment per month, however, as will be done hereafter for those with active judicial arrangements, the installment falls to EUR 188: that is EUR 187.5 for his debt and only EUR half for interest! Consequently, at the end of 240 instalments he will have paid 45,000 euros for his debts and only 120 euros for interest or a total of 45,120 euros. By this method, 99% of the interest is deleted – almost as if the 2010 law defined interest-free repayment.
5+1) Retrospective power for overpayments
However, the Pierrakakis provision applies retroactively: any excess payments delete the last instalments.
In the same (real) example, in 2024 the court gave the debtor and payment exemption for the first three years (zero monthly payments to date). So he didn't pay and nothing will be returned to him.
But if the debtor had started paying back with the first method of calculating interest, two years ago he would have paid 75 euros more each month or 1,800 euros more so far.
The excess payments of EUR 1,800 correspond to 9.5 monthly instalments of EUR 187.5 that the court has decided to pay. These are deducted from the final payments he would have paid at the end of the 20-year period and therefore the debt would have ended 10 months earlier than the prescribed limit set by the court.
However, the regulation only concerns active cases. Those who have already lost the arrangement or have repaid their debt do not enter the process.
PHOTO: Getty Images / Ideal image
