New primary residence protection scheme on Sept 21

Attention may be focused on Prime Minister Kyriakos Mitsotakis’ announcements at the Thessaloniki International Fair (TIF) in a few days, but another major change to the out-of-court debt settlement mechanism is set to be launched in September.

The new primary residence protection framework will take effect on September 21. Under the new rules, debtors will be able to protect their main residence by liquidating other assets.

For the first time, debtors applying for a settlement through the out-of-court debt settlement platform and opting to protect their main home will have the level of debt write-off and monthly instalments calculated exclusively on the basis of the value of the property and the debtor’s income, rather than their total assets. This is expected to result in significantly improved settlement terms.

The option of retaining the primary residence while simultaneously liquidating other assets to repay debts through an electronic auction effectively offers debtors a “second chance”.

Debtors will be able either to accept the settlement proposed or reject it. If they accept, an agreement will be signed providing for the gradual repayment of the value of the main home, although retaining the property will depend on compliance with the terms of the agreement.

Meanwhile, the option of settling debts of less than €5,000 owed to the state, banks and servicers through the out-of-court mechanism has already been activated.

“This comes on top of the 72 instalments, improvements to the out-of-court mechanism, the increase in the protected bank account threshold and measures that give thousands of citizens the opportunity to address accumulated debts and regain control of their lives. Tackling private debt is an economic issue, but also a deeply social one,” National Economy and Finance Minister Kyriakos Pierrakakis recently said on the occasion of the activation of primary residence protection through the out-of-court mechanism.

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