Greece launches electronic platform for out-of-court debt settlements

Greece on Monday launched an electronic platform for applications under its new out-of-court debt settlement mechanism, allowing more debtors to restructure outstanding liabilities owed to the state, banks and loan servicing companies.

Under the new framework, individuals and businesses with debts exceeding €5,000 can apply for debt restructuring, compared with the previous minimum threshold of €10,000.

The lower eligibility threshold is expected to enable up to one million additional debtors to benefit from the scheme's repayment terms.

Longer repayment periods available

The mechanism allows debts owed to the tax authority and the country's social security fund (EFKA) to be repaid in up to 240 monthly instalments, while debts owed to banks and loan servicing companies can be repaid in up to 420 monthly instalments.

The minimum monthly payment has been set at €50.

The entire application process is conducted electronically. Applicants are required to provide detailed information on their income, assets and financial obligations, after which the platform calculates a proposed repayment plan, including the number and amount of instalments.

Partial debt write-offs possible

The new mechanism also provides for partial write-offs of principal debt in cases where they are deemed necessary to ensure the long-term sustainability of the repayment plan.

Eligibility for a write-off is assessed based on the applicant's income, assets and overall financial situation.

Repayment plans approved under the scheme will carry a fixed interest rate of 3% for their entire duration.

Source:AMNA