Greece activates primary residence protection in out-of-court debt settlement mechanism

Mechanism takes effect

Greece's Ministry of National Economy and Finance has activated an updated protection framework for primary residences within the national out-of-court debt settlement mechanism. Taking effect on 21 September 2026, the tool permits indebted homeowners to ringfence their main residence from secondary properties when applying for multi-creditor restructuring. The system coordinates obligations owed to commercial banks, credit servicers, the Independent Authority for Public Revenue (AADE), and the e-EFKA social security fund into a single binding payment schedule.

The ministry detailed the scope of the framework in its official launch announcement on Monday.

The new regulation responds to citizens' long-standing demand for a reinforced safety net for primary residences, while introducing greater flexibility for hundreds of thousands of debtors.

Separation of assets and calculation terms

Under the new procedure, applicants using the electronic portal can isolate the home in which they reside from the remainder of their real estate holdings. Debt write-offs and monthly payment amounts are calculated solely on the debtor's reported income and the assessed value of the primary residence, rather than their total net worth. As a trade-off, debtors agree to the liquidation of their secondary properties through a simplified electronic auction procedure to recover debt for creditors.

The restructuring terms outlined by authorities illustrate how the mechanism handles split holdings. In an official example, an applicant with €300,000 in total obligations who owns a primary residence worth €150,000 and secondary property valued at €50,000 can request exclusive protection for the primary dwelling while approving the liquidation of the secondary real estate.

Creditor obligations and legal protections

The framework prevents debtors from unilaterally choosing which properties to retain without creditor approval. When an application is finalized, participating creditors evaluate the debtor's holdings and can present a formal counter-proposal detailing the sale of non-primary assets necessary to satisfy outstanding balances. For debtors designated as vulnerable and eligible, institutional creditors are required by law to offer this primary residence preservation plan.

Debtors retain full discretion to accept or reject the proposal presented by creditors. If an applicant rejects the counter-proposal, their case proceeds under standard out-of-court settlement rules without requiring property liquidations. Once all parties execute the final restructuring contract, the agreement acquires the status of an enforceable title. This status explicitly prohibits debt enforcement actions, asset seizures, property auctions, and precautionary injunctions against the primary residence, provided the debtor complies with monthly payment schedules.

Settlement metrics and eligibility boundaries

Access to the out-of-court platform remains governed by a strict €5,000 minimum debt threshold across combined liabilities with public entities, banking institutions, and debt servicing firms. Borrowers with total arrears such as €6,000 or €7,500 can file for a unified settlement, whereas obligations falling even one euro below €5,000 cannot enter the platform and must be resolved through other mechanisms.

Official registry figures through the end of August 2026 show that 67,997 debt restructurings have been completed successfully since the platform opened, representing €20.56 billion in initial obligations. In August 2026 alone, authorities recorded 1,364 new settlements totaling €361.65 million. Overall settlement totals and cumulative debt write-offs rose by approximately 52% following legislative adjustments in Law 5193/2025 enacted in April 2025, which doubled income and property eligibility limits across the system.