The Ministry of National Economy and Finance’s bill, entitled “Strengthening oversight of claims managed from loans and credit – Protecting borrowers who meet their obligations…”, was submitted to Parliament on 26/10/2026.
Among other things, it aims to abolish the Code of Conduct and introduce a new framework for bilateral debt restructuring, again through an electronic platform.
Recently, the Ministry issued the following statement: “With the new framework, we are setting clear rules for the private debt market and real consequences when they are breached. For the first time, negotiations without deadlines are being brought to an end.
We are introducing a 15% cap on upfront payments, instead of demands for 30%, 40% or even 50%. We are protecting borrowers who meet their obligations. As long as they comply with their repayment arrangements, they cannot face seizure or auction. And if the servicer fails to provide full details of their debt within 45 days, interest is frozen.”
Having read the bill’s provisions and followed the discussions in Parliament’s Standing Committee on Economic Affairs, we should make the following points:
a) For years—from 2014 onwards—there have been deadlines for negotiations with servicers and banks (Law 4224/2013 and the Bank of Greece’s Code of Conduct). The bill essentially carries over the Code of Conduct’s Arrears Resolution Procedure without introducing anything substantially new.
The only new elements are the consequences of missing the deadlines: if the creditor fails to propose a suitable restructuring solution within three months, the case is automatically classified as “overdue”, the accrual and capitalisation of interest are suspended, and neither new enforcement measures may be initiated nor pending ones continued.
The bill also places particular emphasis on the creditor’s restructuring proposal. It specifically states that the proposal “must be suitable, viable and substantiated on the basis of the debtor’s repayment capacity and financial circumstances…”
However, to be realistic, this emphasis is not enough: the courts will once again have to decide whether the creditors’ proposals are unreasonable, as they do today. The bill does not require creditors to make a specific restructuring proposal, nor does it set out specific criteria or a method of calculation. Once again, therefore, it refers to vague concepts which, as usual, provide fertile ground for ongoing legal disputes.
b) Under the current out-of-court debt restructuring mechanism, if an auction is imminent, the creditor may, at its discretion, require an upfront payment of up to 10% of the principal as determined by the calculation tool’s proposal—that is, after any relevant write-offs. Vulnerable debtors are fully exempt from this provision.
By contrast, the current bill provides for an upfront payment of up to 15% “of the principal”, without any of the safeguards described above. It does not require an auction to be imminent, does not clarify that the principal is calculated after any write-off, and does not exempt vulnerable debtors. It merely allows the creditor (“may”) to reduce or waive the upfront payment.
In practice, when an auction is pending, servicers usually seek an upfront payment of between 15% and 25% of the market value of the encumbered real estate as a condition of restructuring. The 15% figure is therefore not only higher than the limit under the out-of-court mechanism and a way of “legitimising” a practice that could be challenged in court as abusive under current law; at times, it also overturns existing practice. (Several organisations rightly pointed this out during the parliamentary debate.)
c) “We are protecting borrowers who meet their obligations. As long as they comply with their repayment arrangements, they cannot face seizure or auction.” This was the statement issued by the Ministry responsible. However, as was rightly pointed out in the parliamentary debate, the bill presents as new something already established under our legal system: as long as debtors comply with their repayment arrangements, they cannot in any case face seizure or auction, since the claim is no longer due and payable. The bill therefore adds nothing new.
What is genuinely new, however—beyond the sanctions provided for against servicers—is the provision for the automatic suspension of the auction process once the notary has been notified. Under the bill, any action taken in breach of this provision is “automatically void and produces no legal effects”.
So if a servicer proceeds with an auction while a repayment arrangement is being honoured, the bill provides for automatic suspension, without the need to seek relief in court, such as by filing an objection.
Even so, it is hard to imagine a notary acting as a quasi-judicial body, examining documents submitted by the debtor and deciding to suspend the auction without a court ruling, when the servicer initiating the auction has not notified the notary accordingly.
The matter will therefore probably end up in court again, with debtors applying to challenge auctions that have been conducted invalidly, as they do now. The “automatic” suspension is thus less automatic than it is presented, and the provisions largely repeat what is already in force.
d) A legislative framework has been in place since 2000 requiring credit institutions to provide debtors with copies of their contracts and a statement breaking down the amount owed, as well as copies of existing account records and supporting documents, within 90 days.
A relevant provision specifically covering servicers was introduced in 2023 (Bank of Greece Governor’s Act 2501/2002, which also applies to servicers; Article 47(3) of Law 2873/2000; and, specifically for servicers, see Article 13 of Law 5072/2023). The bill therefore introduces no new provision here either. What is new, however, is the penalty—although it is not particularly significant: if the information is not provided in full and on time, the claim will not accrue contractual or default interest.
e) Nor is the provision on the cap on interest-bearing debt new. Under a law in force since 2004 (Law 3259/2004), total overdue debt is capped at three times the original principal—or twice the original principal for farmers. Creditors must recalculate the debt within six months, and the outstanding balance is automatically reduced accordingly.
The Ministry has therefore tried to present this provision as new, although it has been in place under the 2004 law all along, without any application having to be submitted. As Supreme Court judgment No. 696/2021 also states: “Accordingly, debts are adjusted automatically; no other condition is required for the provision to take effect, and in particular the debtor does not have to submit an application to the bank within the prescribed time limit.”
Moreover, as the representative of the Hellenic Bank Association acknowledged in Parliament, if the debtor disagrees with the calculation, they will have to go to court. The biggest problem with the 2004 law is the different methods of calculation and the issues that remain unresolved even today, after nearly 20 years in force—and which this bill does not resolve either.
f) Finally, the new bilateral restructuring procedure had originally provided that the agreement would constitute an enforceable title (the much-discussed “Article 23”). This would have meant that the creditor did not need to go to court to obtain a judgment: if the agreement was not honoured, the creditor could proceed with enforcement on the basis of the agreement signed by the parties.
Yet, since June 2026, the restructuring agreement under the out-of-court mechanism established by Law 4738/2020 has already been provided for as an enforceable title (Article 27(3)). Servicers have also long been instructed, where possible, to put bilateral restructuring agreements through “mediation” in order to obtain the enforceable title provided for under Law 4640/2019.
In any case, this article was withdrawn from the bill at the last minute.
* George Psarakis (MSc, LL.M., PgCert) is an Athens-based lawyer and partner at the law firm Psarakis-Kefalas (www.psarakislegal.com).