A key change that will pave the way for automatic seizures and auctions in cases where debts are covered by bilateral arrangements is included in the bill on “red” loans put out for consultation by the Ministry of National Economy and Finance.
Among the “small print” of the bill, which otherwise contains a range of positive provisions for borrowers under the new bilateral restructuring process, is a clause providing that bilateral arrangements, like those already made through the Out-of-Court Mechanism, will have the force of an enforceable title. This means, lawyers explain, that if a debtor fails to make a payment, seizure and auction proceedings will begin automatically, with no scope for procedural defence.
The new provision giving bilateral arrangements the status of enforceable titles, like the corresponding provision introduced just beforehand for debts handled through the Out-of-Court Mechanism, responds to a longstanding request from financial institutions and, above all, servicers.
They had argued that restricting debtors’ ability to file objections — whether to challenge the legality of the debt or the servicer’s legal standing — would speed up the resolution of “red” loans.
Lawyers representing borrowers, for their part, stress that while this right may delay debt recovery, limiting the right to file an objection could also work unfairly against debtors.
Given the urgent need to resolve “red” loans, however, the government appears to be opting to speed up the process.
Bilateral arrangements to become enforceable titles
The bill’s change that has raised concerns among lawyers is tucked away in Article 231, which stipulates that a signed restructuring agreement will constitute an enforceable title.
The bill states:
- “The restructuring agreement constitutes an enforceable title, in accordance with Article 904(2)(g) of the Code of Civil Procedure (Presidential Decree 503/1985, Government Gazette A’ 182), for all the claims against creditors set out in it.
- For all claims against creditors, the restructuring agreement, as an enforceable title, applies both to the debtor and to guarantors, co-debtors and providers of security who are parties to the agreement.
- The restructuring agreement allows for precautionary attachment and the registration of a mortgage prenotation pursuant to Article 724(1) of the Code of Civil Procedure.
- Third parties against whom the enforceability of the agreement extends under the Code of Civil Procedure, but who are not parties to it, are entitled to file the objection provided for in Article 933 of the Code of Civil Procedure within twenty (20) working days of service of a demand for enforcement, and to raise objections relating to their own personal liability.”
In practice, lawyers explain, giving an agreement legal force as an “enforceable title” (under Article 904 of the Code of Civil Procedure) means that a creditor can immediately initiate enforcement proceedings — seizure and auction — against a debtor’s assets, entirely bypassing the earlier stage of applying to the courts for a payment order.
Because no payment order will be issued, the debtor is deprived of the right to file an objection. In other words, the debtor loses the opportunity to challenge in court the legality of the debt, how interest has been calculated, the amount claimed or any potentially abusive terms before the case reaches the enforcement stage.
The bill’s wording, which allows only third parties to file an objection, leaves the primary debtor’s rights in limbo, says George Kaltsas, a lawyer in Piraeus: “This raises a reasonable question: why does the legislator expressly provide for third parties to file an objection, but not for the primary debtor?”
He notes that this might, as a matter of interpretation, be covered by Article 27 of Law 4738/2020, as currently in force (“all legal remedies provided for under the legislation in force are permitted against enforcement proceedings initiated under this article”).
However, he says, “because this raises a very serious issue concerning the primary debtor’s procedural protection, the provision needs to be improved and should expressly preserve the procedural rights set out in Article 933 of the Code of Civil Procedure for the primary debtor as well”.
Another important issue, he notes, is that the contractual arrangement becomes an enforceable title without prior judicial review of the claim. “This raises a further significant question about the effectiveness of judicial protection for the primary debtor and, in this case, for third parties too,” he says.
The precedent set by the Out-of-Court Mechanism
Making bilateral restructuring agreements enforceable titles is not an isolated legislative choice, but a natural continuation of changes already implemented in the Out-of-Court Mechanism (Law 4738/2020, as recently amended by Law 5313/2026), which point in precisely the same direction.
Under the Out-of-Court Mechanism, the protection of a primary residence is now offered in return for the debtor’s contractual commitment to accept the sale of their other real estate. This sale is not based on a separate court title, but is incorporated as a term of the restructuring agreement itself, which serves as the sole enforceable title. The creditor can therefore initiate enforcement directly by obtaining a copy from the platform, bypassing the formal step of starting enforcement proceedings by serving an enforceable copy and a demand for enforcement.
The law governing the Out-of-Court Mechanism expressly excludes the debtor’s right to file objections under Articles 933 and 936 of the Code of Civil Procedure, while also denying the debtor the special remedy provided for in Article 583. In effect, accepting the arrangement is equivalent to giving prior consent to liquidation. If the arrangement falls through, protection is automatically withdrawn, creditors can proceed with liquidation within 40 to 60 days, and the debtor and any co-signing guarantors are left legally disarmed.
How bilateral arrangements will “step up a gear”
In other respects, the bill from the Ministry of National Economy and Finance significantly strengthens the framework for bilateral arrangements, with the aim of speeding them up and making them a genuinely effective alternative to arrangements under the Out-of-Court Mechanism.
The bill seeks to bring order to negotiations between creditors and borrowers by introducing safeguards and standardised procedures that favour borrowers who keep up with their obligations during negotiations.
The new “Special Procedure for Bilateral Debt Restructuring” provides, among other things, that:
- Strict deadlines are set for negotiations. The entire process must take no longer than six months from the submission of a complete application. Creditors must notify the debtor if a payment is more than 90 days overdue. The creditor must now respond within three months, offering either a sustainable solution (including two alternatives if feasible) or a fully reasoned rejection, taking into account the debtor’s reasonable living expenses. The debtor must respond — by accepting, rejecting or making a counterproposal — within one month.
- Protection against auctions of a primary residence applies while an application for a bilateral arrangement is under review. The parties are required to act in good faith, and the creditor is barred from initiating enforcement against the primary residence, seeking interim measures against it or registering a new mortgage.
- Interest and upfront payments are subject to limits. A creditor’s proposed arrangement may include an upfront payment of up to 15% of the principal, with provision for waiving or reducing it in cases involving health problems or social criteria. In addition, if the creditor is at fault for taking more than three months to respond, the accrual and capitalisation of interest are suspended.
- The process is conducted digitally. Every communication, offer, counteroffer or rejection must be recorded on a dedicated digital platform, creating an audit trail for monitoring servicers. The debtor can take part in the process free of charge.
- A bilateral arrangement can be combined with the Out-of-Court Mechanism. If the debtor applies to the mechanism, the deadlines for the bilateral process are suspended. If the Out-of-Court Mechanism does not produce an outcome, the bilateral process can resume from where it was paused.
- Oversight and penalties are introduced under the Bank of Greece, designated as the competent authority for monitoring creditors’ compliance with statutory deadlines and the duty to act in good faith. The digital platform automatically identifies when a case has become “overdue” — for example, if a servicer has not responded within three months. Such a breach automatically triggers a report to the Bank of Greece, which can impose fines, administrative sanctions and corrective measures. The Hellenic Financial Ombudsman will be responsible for resolving individual disputes.