Red Loans and NPLs in Greece – Complete FAQ Guide

“Red loans” (non-performing loans — NPLs) are loans in payment arrears for more than 90 days, or where repayment without liquidation of collateral is not probable. The relevant legislative framework was initially adopted in 2015 (Law 4354/2015); in 2016 (Law 4389/2016) the possibility of transfer was extended to performing loans as well. However, as six years of application have shown, “the overwhelming majority of non-performing loans are sold under the 2003 law rather than the 2015 law”: in practice, banks use Law 3156/2003 for securitisations almost exclusively, thereby bypassing the mandatory pre-transfer notice to the borrower required by Law 5072/2023. Key actors: (a) credit institutions (sellers), (b) investment funds (purchasers/beneficiaries), (c) Loan Management Companies/servicers (managers).
Read more: NPL Sales and Borrower Rights — 6 Years On

Loan Management Companies (Εταιρείες Διαχείρισης Απαιτήσεων από Δάνεια και Πιστώσεις — ΕΔΑ/servicers) are the new managers of “red” loans and have begun either judicial collection proceedings or contacts with the debtor to identify any basis for settlement. Assignment of management is permitted only under the conditions of Law 5072/2023. Under that law, the servicer “has standing as a non-rightsholder litigant to bring any legal remedy and to take any other procedural action for the collection of the receivables under management.” Standing is, in principle, concurrent (parallel) with that of the bank, unless the management agreement provides for exclusive authority of the servicer.
Read more: NPL File: Servicer Standing — First Picture from the Courtrooms

The key question for the borrower is whether the sale worsens their position. The law provides expressly: “In cases of sale and transfer of claims under this law, as well as in cases of assignment of management, the substantive and procedural position of the debtor and the guarantor is not worsened, and unilateral modification of any contractual term, including the interest rate, is not permitted.” An equivalent provision applies under Law 3156/2003. The borrower may therefore raise against the servicer every defence available against the original bank. Nevertheless, management companies are at times more aggressive than credit institutions, seeking rapid liquidation of collateral. Furthermore, the Bank Code of Conduct continues to apply compulsorily after transfer, by express provision of Law 5072/2023.
Read more: NPL Sales and Borrower Rights — 6 Years On

The answer depends on the law under which the transfer was made. In four appellate decisions in 2022 (ΕφΑθ 1858/2022, ΕφΑθ 3577/2022, ΕφΘεσ 494/2022, ΕφΠειρ 467/2022), following ΑΠ 909/2021, the courts held that “servicers managing loans transferred through securitisation under the 2003 law cannot proceed with enforcement actions (seizures, auctions, etc.) nor issue payment orders or bring claims.” In particular, the Athens Court of Appeal (ΕφΘεσ 494/2022) held that Law 3156/2003 “does not confer on the management company […] the status of non-rightsholder or non-obligor litigant,” in contrast to Law 4354/2015. However, the issue was ultimately resolved in favour of servicers, first by a plenary decision of the Supreme Court (Ολομέλεια ΑΠ) and subsequently by an express legislative provision in Law 5072/2023.
Read more: 4 Appellate Decisions Turning NPL Enforcement Upside Down

Under Law 5072/2023, the servicer is obliged to continue the Delay Resolution Procedure (Διαδικασία Επίλυσης Καθυστερήσεων — ΔΕΚ) of the Bank Code of Conduct from the stage it had reached at the time of transfer, without being permitted to “restart” the process or accelerate it. The ΚΔΤ, in force since 31/12/2014, provides for five distinct ΔΕΚ stages, within which the servicer must exchange financial information with the borrower and examine appropriate restructuring solutions before any termination. Furthermore, the management company’s restructuring proposal must be suitable and viable for the borrower, while any rejection of a counter-proposal by the borrower must be reasoned, so that it can also be subject to judicial review.
Read more: Defending Against Aggressive Servicer Practices

A challenge (ανακοπή) to a bank or servicer payment order can succeed on many grounds: lack of procedural agreement, submission of monthly account statements instead of valid book excerpts (ΜΠρΑθ 1052/2019), incomplete proof of transfer (ΜΠρΗρακλείου 825/2025), contract amendments not taken into account (ΠΠρΒοιωτίας 27/2025), void termination due to defective authorisation (ΠΠρΑθ 518/2024), or issuance of the payment order during ongoing negotiations (ΜΠρΑθ 5095/2019). ΠΠρΑθ 1869/2023 specifically annulled a payment order for lack of procedural agreement on the admission of documents as evidence. Under Law 5221/2025, jurisdiction to issue payment orders is transferred to lawyers — a change expected to affect the control mechanisms.
Read more: Annulment of Bank/Servicer Payment Order following Challenge

In principle (κατ’ αρχήν), the servicer is bound by the ΚΔΤ even if it attempts to circumvent it with unreasonably tight deadlines. In ΜΠρΑθ 753/2020, the court granted an interim injunction prohibiting loan termination by a servicer that had failed to complete the mandatory ΔΕΚ stages, imposing a monetary penalty of €100,000 per breach. According to the analysis of fund and servicer practices, ten recurring tactics have been identified — from pre-approving proposals that are actually inflexible to imposing short response deadlines — which a borrower’s counsel can challenge either during the ΔΕΚ itself or through the courts. A key defensive move is to demand reasoned rejection in writing if the bank or servicer refuses a counter-proposal.
Read more: Defending Against Aggressive Servicer Practices

Termination of a loan agreement without completing the ΔΕΚ of the Bank Code of Conduct entails absolute invalidity of the termination under Arts. 174 and 180 of the Civil Code, as being contrary to a prohibitory provision of law. However, the role of the Bank of Greece is limited to supervision — judicial enforcement of the ΚΔΤ is effected through a claim or an application for interim injunctive relief by the borrower.
Read more: Bank Code of Conduct — The First Three Years of Application

The regulatory framework of the Bank of Greece (ΠΔ/ΤΕ 2501/2002 and ETPTH 178/3/19.7.2004) provides that changes to a variable interest rate must be linked exclusively to indices of general and widely accessible interest rate character, such as the ECB intervention rates or Euribor. However, clauses that grant the bank merely a “possibility” — and not an obligation — to follow rate changes have been held void: “although […] the adjustment of the base rate […] would be made on the basis of indices of general and widely accessible interest rate character, […] the disputed term makes no reference to the timing [of adjustment]” (ΠρΘεσ). The borrower may seek a court ruling adjusting the interest rate to a fair level under Art. 371 of the Civil Code.
Read more: Are Interest Rate Increases on Loans Justified? Available Defences

The institution of judicial suspension under Art. 1000 of the Code of Civil Procedure (ΚΠολΔ) allows the debtor to “freeze” the foreclosure process for up to six months, in order to achieve an increase in the property’s value or to find repayment resources. The basic condition is the absence of any risk of harm to the enforcing creditor, cumulatively with a prima facie showing either that “the debtor will achieve economic recovery” or that “a higher auction price will be obtained after the suspension period.” ΜΠρΑθ 3582/2022 held that “an overall settlement of the debt or prior partial payments towards the total debt” constitute elements supporting such a finding. Suspension is granted conditionally on payment of enforcement costs and 1/4 of the principal (Art. 1000 para. b), and is granted only once.
Read more: Judicial Suspension of Foreclosure Auction for up to 6 Months (Art. 1000 ΚΠολΔ)

The Out-of-Court Debt Restructuring Mechanism (Εξωδικαστικός Μηχανισμός Ρύθμισης Οφειλών) of Law 4738/2020 is available to natural and legal persons with bankruptcy capacity: professionals, commercial companies, farmers, and anyone else carrying out an economic activity. Its objective is debt rehabilitation through agreement with the majority of creditors, with two key safeguards: (a) suspension of enforcement actions during negotiations (art. 18, Law 4738/2020), and (b) compulsory accession of the minority of creditors to the will of the majority.
Read more: The New Out-of-Court Mechanism — Law 4738/2020

The Out-of-Court Mechanism covers debts to credit institutions, servicers, the Greek State (AADE), and Social Security Funds (EFKA). Excluded from the possibility of principal write-off for State debts are withheld taxes, VAT, and social security contributions relating to third parties. To achieve a binding arrangement, consent is required from creditors representing at least 60% of total debts, of which at least 40% must hold secured claims — this majority binds also the non-consenting creditors. However, if the agreement is breached — failure to pay 3 instalments or an amount equivalent to 3% of the total debt — the arrangement may be terminated.
Read more: The “Secrets” of the New Out-of-Court Mechanism

The law provides for suspension of enforcement acts, with three important exceptions: (a) protection is not provided from the time the application is created but from the time of its definitive submission (“finalisation”); (b) it does not cover the pre-auction proceedings of a secured creditor (seizure, continuation declaration) — only the auction act itself; and (c) it does not cover an auction scheduled within three months of the application. Notably, the Ioannina Court of Appeal (Εφετείο Ιωαννίνων 157/2022) upheld an application for suspension of an auction because an out-of-court restructuring procedure under art. 18 of Law 4738/2020 was in progress. Even outside the automatic protection, judicial suspension of a specific enforcement act remains possible where the delay is due to a malfunction of the mechanism or omissions by creditors.
Read more: Protection of the Out-of-Court Mechanism from Foreclosure Auctions

In the context of a completed out-of-court restructuring process, a ship repair company with total debt of €8,043,898.71 to EFKA and AADE achieved a write-off of €3,931,596.81, i.e. 48.88%, with the balance repaid in 240 instalments at an interest rate of 3%. The maximum number of instalments for State debts is 420 for natural persons with secured debts, 240 for legal persons with secured debts, and 180 for unsecured debts of legal persons.
Read more: Completion of Restructuring through the Out-of-Court Mechanism — €4m Write-off

Under Law 5162/2024, art. 99, an exemption from income tax was introduced from 1.1.2024 for amounts of debt write-off carried out in the context of an out-of-court settlement with credit institutions or loan management companies. This is a long-awaited regulatory intervention that replaces the narrower scope of art. 62 of Law 4389/2016. Furthermore, a Digital Transaction Fee (Ψηφιακό Τέλος Συναλλαγής) of 2.40% on the post-settlement debt balance applies to the arrangement achieved through the out-of-court mechanism — a cost that must be factored in during negotiations.
Read more: The Tax Implications of Loan Claim Write-offs — Law 5162/2024

Achieving an agreement through the out-of-court mechanism does not automatically release the guarantor: Law 4738/2020 provides that the guarantor continues to be liable for the amount of the original debt, irrespective of any write-off or restructuring achieved for the primary debtor. However, according to ΕφΑθ 1008/2016, where the obligation is novated as a result of a restructuring, a guarantor who did not consent to the restructuring is released from the guarantee obligation to the extent of the novation. Furthermore, the guarantor retains an independent right to challenge a payment order issued against them, raising both defences arising from the guarantee agreement and defences of the primary debtor that are not exclusively personal to that debtor.
Read more: Annulment of Bank/Servicer Payment Order following Challenge