A new legislative amendment by the Ministry of National Economy and Finance introduces a retroactive reduction in monthly debt burdens for thousands of borrowers with active repayment plans under the Katseli Law — Greece’s judicial framework for rescuing over-indebted households and protecting primary residences.
What’s Changing?
The key change lies in how interest is calculated on loans covered by judicial rescue rulings. Previously, interest accrued on the entire outstanding principal balance. Under the new rule, interest applies only to the court-ordered monthly installment — meaning it’s computed solely on the portion of capital due each month, plus interest for the period between consecutive payments. For the first installment, the accrual period is set at 30 days.
How Much Can Payments Drop?
The impact can be dramatic. According to an official example published by the Ministry, a borrower with a remaining balance of €144,500 as of January 2024 was previously paying €731 per month over 300 months. Under the new calculation, that payment drops to €483 — of which €482 goes toward principal and just €1 toward interest.
Over the full term, total interest payments fall from €74,852 (under the old method) to just €411 — after accounting for excess amounts already paid. This reflects a near-total elimination of compound or inflated interest charges.
Retroactive Adjustment — No New Court Cases Needed
Critically, the change applies retroactively to all active, uncompleted Katseli Law arrangements — without requiring borrowers to file new lawsuits. Any excess amounts already paid due to the previous interest calculation will now be reclassified as principal repayments. These sums won’t be refunded in cash but will directly reduce the remaining debt balance — effectively shortening the repayment schedule.
In the same example, if the borrower paid €731 monthly from January 2024 through June 2026 (30 months), they would have overpaid by €7,440. Instead of continuing with 270 remaining installments, those excess funds cut the repayment term down to 255 installments of €483, followed by a final reduced payment of €266.
Who’s Excluded?
The retroactive application does not cover cases already concluded or where borrowers have been formally declared in default — for instance, due to prolonged non-payment triggering legal consequences such as forfeiture of the arrangement. In those instances, either the debt has been settled or irreversible legal effects have already taken place.
Banking Costs Clarified
The provision also addresses fees: any excess charges collected by lenders prior to the transfer of loan servicing responsibilities — or before this legislative update — will be reassessed and applied toward principal reduction, aligning with the new methodology.