Expanded Debt Settlement Mechanism: New Opportunities for Middle-Class Borrowers

A new opportunity for mass inclusions of up to 78% more borrowers, primarily from the middle class, is now available under the provisions of a bill submitted by the Ministry of Finance on April 1, 2025. This economic initiative aims to double income, asset, and deposit criteria for inclusion in the out-of-court settlement mechanism, thereby opening doors for thousands of middle-class debtors. Additionally, creditors are now required to submit written settlement proposals to borrowers three months before foreclosure. Vulnerable borrowers can save their homes even 20 days before repossession by joining the intermediate program. The income limits for single households have increased from €7,000 to €14,000, while for families with five or more members, it has risen from €21,000 to €42,000. Asset thresholds have also doubled, ranging from €120,000 to €240,000 for single households. A key condition for these new criteria is that unpaid debts to banks and servicers must not exceed €300,000. Furthermore, servicers must provide written settlement proposals at least three months before foreclosure, giving borrowers ample time to respond. The bill also extends deadlines for vulnerable borrowers facing property repossession, allowing them to apply up to 20 days before foreclosure. The intermediate program has been extended by an additional six months to facilitate the establishment and operation of the Acquisition and Reletting Agency.