Greek borrowers will receive a fixed 3 per cent interest rate and a 120-instalment repayment plan under private debt legislation passed by parliament in Athens.
Lawmakers approved the Ministry of National Economy and Finance bill on Thursday, 5 November, introducing broad relief for individuals and businesses facing outstanding debts to commercial banks, the state tax office, and the national social security fund.
The dual intervention establishes an interest rate cap for out-of-court loan restructurings and reopens long-term settlement facilities for legacy public arrears, the Athens-Macedonian News Agency reported.
Supervisory penalties for credit servicers
Alongside restructuring options for debtors, the legislation sharply increases regulatory penalties against credit servicing companies that violate consumer protection standards. The Bank of Greece will now be able to levy supervisory fines of up to 5 million euros on servicers, up from the previous ceiling of 500,000 euros.
Credit servicing firms took control of vast non-performing loan portfolios from Greek commercial banks following the country's sovereign debt crisis. The tenfold increase in statutory penalties aims to deter abusive practices and enforce statutory borrower rights during recovery proceedings.
Fixed rates in out-of-court settlements
Under changes introduced by National Economy and Finance Minister Kyriakos Pierrakakis, vulnerable borrowers and eligible debtors will receive a fixed 3 per cent interest rate when restructuring debts through Greece's Extrajudicial Mechanism. The new interest framework will apply to debt payments starting on 1 December 2026.
Under the previous framework, interest rates on restructured loans climbed sharply after three years, reaching 5.17 per cent for debts backed by collateral and 5.57 per cent for unsecured obligations. The out-of-court workout mechanism provides a standardized digital platform for multi-creditor debt settlements.
Official estimates indicate significant financial savings under the 3 per cent rate. For a debt of 100,000 euros repaid over 20 years, a debtor will save approximately 20,200 euros on a secured loan and 28,600 euros on an unsecured claim.
Lawmakers also expanded the scope of the extrajudicial mechanism by setting a lower entry threshold of 5,000 euros, opening the process to a far broader group of debtors.
Final submission of an application triggers an immediate suspension of debt enforcement and asset seizures. Repayments can run up to 240 instalments, or 20 years, for debts owed to the state, and up to 420 instalments, or 35 years, for bank and fund liabilities.
An automated algorithm evaluates applicants against income and asset criteria. Where qualifying criteria are met, the algorithm can recommend partial write-offs of penalty surcharges or even slices of the underlying principal debt.
Ten-year repayment plan for tax and pensions
The second major reform establishes a 120-instalment settlement scheme for legacy arrears owed to the state tax office and social security funds. More than one million households and businesses are estimated to be eligible to settle their old debts over a ten-year horizon.
Greece's Independent Authority for Public Revenue, known as AADE, will activate a dedicated online platform in mid-November to process applications. The electronic portal will accept filings until the end of June 2027, with the minimum monthly payment set at 30 euros.
The 120-instalment facility replaces an earlier 72-instalment framework for debts that became overdue on or before 31 December 2024. To qualify, assessed liabilities must not have been enrolled in another active settlement plan as of 30 September 2026.
The measure covers arrears owed to tax authorities and e-EFKA, the National Social Security Fund that administers pensions and social insurance contributions across Greece. The extension effectively provides distressed taxpayers a full decade to restore compliance with the state.
Eligibility rules and enforcement protections
Taxpayers entering the 120-instalment arrangement must meet strict compliance rules. Participants will forfeit the settlement if they miss two consecutive monthly instalments or allow fresh, unmanaged arrears to accumulate.
Debtors must settle all new debts incurred from 1 January 2025 onwards within one month of joining the programme. They must also have submitted all required income tax returns from the past five years by 31 December 2025.
The law explicitly bars anyone with an irrevocable criminal conviction for tax evasion or smuggling. Taxpayers currently enrolled in the older 72-instalment framework may transfer their debts to the 120-instalment scheme, provided their existing arrangement is in good standing.
Compliant debtors will receive official tax clearance certificates. Criminal prosecutions for non-payment of state obligations will be suspended, along with mandatory collection measures and asset foreclosures. For debtors subject to third-party bank account attachments, authorities will release future receivables under specific statutory conditions to allow businesses to maintain basic cash flow.
