Out-of-Court Debt Settlement Workout – Complete FAQ Guide

Under Article 5(1) of Law 4738/2020: “The out-of-court mechanism aims to provide participating creditors with a functional environment for formulating proposals for the restructuring of the debtor’s debts and avoiding the risk of his insolvency.” The out-of-court workout now constitutes, alongside the individual procedure of the Bank Code of Conduct, the primary tool available to a viable debtor. The value of resorting to it can be considerable: this swift procedure may ultimately lead to a negotiated solution, while — should creditors refuse to submit a proposal — that fact will be weighed by the court in any subsequent litigation.
Read more: The New Out-of-Court Debt Settlement Mechanism under Law 4738/2020

Under Article 7 of Law 4738/2020, applications may be filed by natural and legal persons that have bankruptcy capacity. Under Article 76(1) of the same law, bankruptcy capacity is held by natural persons and legal persons pursuing an economic purpose. Applications may therefore be filed not only by businesses and the self-employed, but also by private- or public-sector employees. Applications may be filed even in respect of current or performing debts, provided a deterioration of at least 20% in the applicant’s financial condition is shown.
Read more: The New Out-of-Court Debt Settlement Mechanism under Law 4738/2020

Through the out-of-court workout, debts owed only to financing institutions, the State, Social Insurance Funds (SIF), and Municipalities may be restructured, provided the total amount of the applicant’s debts exceeds €10,000. Exceptionally, performing debts may also be restructured where the applicant demonstrates a deterioration of at least 20% in financial condition. Unlike the repealed Law 4469/2017, and unlike the rehabilitation procedure, debts owed to third parties (e.g., trade creditors) cannot be restructured. Furthermore, the principal amount of social insurance contributions and of withheld or pass-through taxes (VAT, income tax withheld at source, etc.) cannot be written off.
Read more: The Mosaic of Debtor Options: Bankruptcy, Out-of-Court, Rehabilitation, or Code of Conduct

The calculation tool takes into account the applicant’s income, debts, assets, and encumbrances in order to compute the debtor’s repayment capacity (Maximum Debt Repayment Capacity — MDPCO — the maximum amount the debtor can repay to all creditors). Repayment capacity may be determined in three ways: on the basis of tax data, on the basis of the monthly repayment capacity declared by the debtor, or on the basis of the minimum recovery amount for the creditor — the highest of these three figures is used. The restructuring proposal always complies with the no-creditor-worse-off principle, in the sense that each creditor will receive from the restructuring at least the amount it would have received in the event of liquidation of the debtor’s assets through enforcement proceedings.
Read more: Debt Settlement Criteria under the New Out-of-Court Mechanism of Law 4738/2020

Repayment of amounts owed to the State or Social Insurance Funds may be made in up to 240 monthly instalments, each of at least €50. Law 5024/2023 brought a significant reduction in the interest rate for restructurings with public bodies, which was set at a fixed 3%. Write-off of the principal debt cannot in any case exceed 75%, and no write-off of principal is possible for pass-through and withheld taxes and social insurance contributions.
Read more: Recent Amendments to the Out-of-Court Debt Settlement Mechanism (Law 5024/2023)

For debts owed to financing institutions, repayment may be made in: (a) up to 420 monthly instalments for secured loans of natural persons, (b) up to 240 monthly instalments for secured loans of legal persons and unsecured loans of natural persons, and (c) up to 180 monthly instalments for unsecured loans of legal persons, in accordance with the Annex to Joint Ministerial Decision 13243/2024. However, within the out-of-court procedure there is no obligation on credit institutions or loan management companies to enter into a restructuring. Where the proposal obtains the required majority — 60% of total financing institution claims, including 40% of claims secured by an encumbrance — a debt restructuring agreement is signed that is binding on non-consenting creditors as well.
Read more: The Mosaic of Debtor Options: Bankruptcy, Out-of-Court, Rehabilitation, or Code of Conduct

Under Article 18 of Law 4738/2020: “From the final submission of the application until the conclusion of the procedure in any manner, the taking of enforcement measures and the continuation of enforcement proceedings in respect of claims, movables, and immovables against the debtor are stayed.” The stay in collective proceedings is not imposed solely for the debtor’s benefit; it is imposed primarily for the benefit of creditors, so that no single creditor gains an unfair advantage at the expense of the others. It constitutes a statutory “breathing space” to allow the necessary negotiations to take place in an orderly manner. A critical prerequisite is the final submission of the application — mere creation of a draft on the platform is insufficient.
Read more: Stay of Enforcement upon Filing an Application to the Out-of-Court Mechanism

The law on the out-of-court mechanism provides that debtors are protected from enforcement acts subject to three important exceptions: (a) the automatic protection does not run from the time the application is created but from the time it is finally submitted; (b) the protection does not cover pre-auction proceedings (e.g., service of an enforcement writ, imposition of a seizure) carried out by a secured creditor (e.g., a bank holding a pre-notation over the debtor’s immovable property); (c) the protection does not cover an auction scheduled within three months of the final submission.
Read more: Protection of the Out-of-Court Mechanism from Auctions and Other Enforcement Acts

Article 16(1) of Law 4738/2020 provides that if the restructuring agreement is not signed within two months of the date of final submission of the application, the procedure is deemed to have been concluded without result. In practice, however, the out-of-court procedure typically lasts considerably longer than two months — whether due to delays in processing by creditors or due to requests for correction of data on the platform. In MProtAth 4203/2023 the court held that “although a period of two months has elapsed since submission without a restructuring agreement being signed, the settlement procedure has not been completed — and the delay is assessed as probably not due to the fault of the applicants but to a malfunction of the electronic platform.” It is therefore not uncommon for courts to find that enforcement proceedings should be stayed even after the two-month period has expired without result, in particular where enforcement is pursued in an abusive manner.
Read more: Filing an Application to the Out-of-Court Mechanism and the Fate of Enforcement Proceedings — Case Law Examples

If the proposal generated by the calculation tool is accepted by creditors (60% of total financing institution claims, including 40% of the secured claims of financing institutions), it is displayed on the debtor’s screen. If, however, it is not accepted, the debtor has no way to access it, since it is classified as “confidential” (!). The striking feature is that only creditors receive the proposal, and if they ultimately disagree with it, the debtor sees on their screen only the 10-15 words of the rejection rationale — not the proposal itself. When the debtor does not know the proposal, they cannot have a negotiating baseline with creditors outside the platform, whereas if both parties had an objectively determined figure as their reference point, they could negotiate around it.
Read more: Out-of-Court Mechanism: Bank Settlements and the Secret Result of the Algorithm

Case law has found the conduct of financing institutions to be abusive in various circumstances. In MProtPatr 367/2024 the conduct of a loan management company was found abusive on account of systematic and prolonged obstruction of the completion of the submission procedure — the company had filed repeated requests for correction of entries on the platform, preventing any progress. Moreover, the conduct of a creditor in pursuing enforcement despite being covered by the stay constitutes, beyond a ground for opposing enforcement, a basis for tortious liability under Articles 914 et seq. of the Civil Code.
Read more: Filing an Application to the Out-of-Court Mechanism and the Fate of Enforcement Proceedings — Case Law Examples

Law 5024/2023 introduced a series of amendments: an obligation on financing institutions to state reasons for non-consent, a reduction of the interest rate to a fixed 3% for restructurings with public bodies, the possibility of excluding performing debts (≤15% deviation), and an interest discount for full early repayment of the restructuring as regards the State. Law 5072/2023 introduced mandatory acceptance of the calculation tool’s proposal by financing institutions in cases where the application is filed by a person qualifying as a vulnerable debtor. Law 5193/2025 (in force from 14.4.2025) introduced further changes aimed at increasing the number of successful restructurings. In particular, a new category of presumed creditor consent was introduced (eligible debtors), and provision was made for the cessation of criminal prosecution for the offence of non-payment of debts in the event of conclusion of a debt restructuring agreement.
Read more: Recent Amendments to the Out-of-Court Debt Settlement Mechanism (Law 5024/2023)

Article 178 of Law 5193/2025 adds point (b) to Article 14(3) of Law 4738/2020, which provides: “For debtors who satisfy up to twice the income and other asset criteria of the vulnerable debtor, whose debts to financing institutions of up to three hundred thousand (300,000) euros were overdue, in whole or in part, for at least ninety (90) days as at the date of entry into force of this law, the consent of all creditors is presumed.” For a single-person household: annual income of €14,000, ENFIA-assessed immovable property value of €240,000, deposits of €14,000.
Read more: The Five Key Points of Law 5193/2025 Regarding the Out-of-Court Debt Settlement Mechanism

Through the out-of-court mechanism, the debt of a shipbuilding company amounting to €2,987,477.06 owed to the State and €5,056,421.65 owed to EFKA — a total debt of €8,043,898.71 — was restructured. Under the settlement, a total write-off of €3,931,596.81 was agreed (a write-off of approximately 48.88%), with the remaining amount restructured over 240 monthly instalments at a fixed interest rate of 3%. Of critical importance was the correct execution of the “de-duplication” of the debtor company’s assets: the calculation tool reads numbers only, not descriptors, so incorrect de-duplication leads mathematically to an incorrect output and less favourable terms for the debtor.
Read more: Completion of Debt Settlement Proceedings with Write-off of €4 Million in EFKA and AADE Debt

The choice of the most appropriate institutional framework depends on a number of factors, including the level of debts, their composition, the number and type of creditors, and other considerations. Within the out-of-court mechanism, the principal amount of VAT, income tax withheld at source, and social insurance contributions cannot be written off, whereas this is possible under the rehabilitation procedure. Under the out-of-court mechanism, presumed State/EFKA consent is available only where debts are below €1.5 million, while under rehabilitation the threshold rises to €15 million for the State and EFKA separately.
Read more: The Mosaic of Debtor Options: Bankruptcy, Out-of-Court, Rehabilitation, or Code of Conduct

The application is submitted through the electronic platform of the General Secretariat for the Financial Sector and Private Debt Management (GSFSPDM) and must include at least: full details of the debtor with reference to turnover or income; a list of all creditors with reference to the amount of each creditor’s claim; a list of movable and immovable assets; a full description of encumbrances and security interests; a declaration regarding any transfer or encumbrance of an asset within the preceding five years. These data are collected automatically from creditors, and the debtor must confirm their accuracy and upload the required documents. A critical practical point: submission results in the lifting of banking and tax secrecy, and creditors are granted access to the debtor’s financial data — as well as those of the debtor’s spouse and dependent household members.
Read more: The New Out-of-Court Debt Settlement Mechanism under Law 4738/2020

Where the debtor defaults on the payments provided for under the debt restructuring agreement, resulting in the total unpaid amount exceeding three instalments or 3% of the total outstanding amount, any individual creditor may terminate the agreement; in the case of a bilateral agreement with the State/SIF, failure to pay results in automatic forfeiture of the restructuring. Termination affects only the terminating creditor — the agreement continues in force as regards all other creditors. A critical further issue: the restructuring agreement does not in principle affect any co-debtors or guarantors, who remain liable for the full amount even in the case of partial write-off — and for this reason a separate application must be filed by them as well. An exception applies to the natural person who by operation of law bears joint and several liability with the legal person for debts owed to public bodies — such a person is in every case covered by the restructuring agreement concluded by the legal person.
Read more: The New Out-of-Court Debt Settlement Mechanism under Law 4738/2020