As of today, 21 September 2026, the new, enhanced framework for the protection of the primary residence through the Out-of-Court Debt Settlement Mechanism comes into force.
More specifically, according to an announcement by the Ministry of Finance, borrowers now have the option, when submitting their application on the electronic platform of the out-of-court mechanism, to request settlement of their debts with protection of their primary residence by separating it from the rest of their real estate property.
With the new, fast-track settlement procedure, they secure greater debt write-offs and lower monthly installments, since only the value of the primary residence is taken into account for the calculation of the settlement. As a trade-off, the debtor consents to the voluntary liquidation of their other assets (through a simplified auction procedure).
For the category of vulnerable and eligible debtors, in fact, creditors are obliged to submit this specific alternative settlement proposal, namely the one that includes saving the primary residence and liquidating the other properties.
In any case, the debtor may accept or reject this counterproposal. If they do not accept it, they will receive the out-of-court proposal as applicable, without disposal of the other properties.
With the final signing of the restructuring agreement, any act of enforcement, auction, or taking of precautionary measures against the debtor’s primary residence is expressly prohibited, provided the settlement is observed. In addition, the agreement itself acquires the force of an enforceable title, ensuring a short, clear, and fully consensual procedure for all parties.
Settlement Example Follows
A debtor with total debts of €300,000 and a primary residence worth €150,000 submits an application on the Out-of-Court platform in which they declare that they wish to protect exclusively their primary residence, while at the same time consenting to the liquidation of their remaining properties, with a total value of €50,000.
Debtor steps according to the new procedure
- They submit an application on the Out-of-Court platform, stating that they wish to join the primary residence protection program.
- The platform automatically separates the primary residence worth € 150.000 from the remaining properties.
- Joining the settlement implies that they consent to the liquidation of the other properties worth € 50.000.
- A settlement arises based only on the value of the primary residence.
Step 1 — Calculation of new debt (based only on the primary residence)
According to the new framework, the settlement is based exclusively on the value of the primary residence:
New calculation basis = €150.000
Creditors are obliged to propose a settlement that:
- saves the primary residence
- liquidates the other properties
- reduces the debt to a sustainable level
Debt write-off:
Initial debt: 300.000 euros
Value of other properties: 50.000 euros (liquidation)
Write-off resulting from the algorithm: 150.000 €
Satisfaction of creditors from the liquidation of other properties: 50.000 €
Debt to be settled: 150.000 euros
Step 2 — New monthly installment
The new debt to be settled in the amount of 150.000 euros is arranged over up to 35 years (depending on the debtor’s income situation)
Step 3 — Protection of the primary residence
Upon signing the agreement:
- The auction of the primary residence by creditors whose claims are settled through the out-of-court mechanism (banks/servicers/state/social security institutions) is prohibited
- The agreement has the force of an enforceable title
- The debtor is permanently protected, provided they comply with the settlement
With the new framework:
- The debtor saves their home
- The debt is reduced to half of the original, from € 300.000 to € 150.000
- The installments become sustainable
- The procedure is consensual and fast