Out-of-Court Settlements: Debt Write-offs Reach €3.27 Billion So Far

Debt write-offs have reached €3.27 billion through out-of-court settlements to date. The average debt relief for public debts stands at 15.09%, while for financial institutions (banks and management companies), it reaches 30.4%. Notably, 48.6% of the settlements with financial entities (based on debts) received a write-off greater than 30%. The highest average write-off is observed in consumer loans at 35.56%, whereas housing loans see the lowest at 14%. Business loans average at 30.60%. The out-of-court settlement mechanism will soon include many more debtors who can favorably settle their debts as new legislation doubling the income and asset criteria for debtor inclusion is set to be tabled in Parliament. This expansion effectively includes the middle class in the benefits of the Out-of-Court Settlement program. New income limits will rise to €42,000 from €21,000 previously, depending on household composition, and asset limits will increase to €360,000 from €180,000. Specifically, income thresholds under the current vulnerability status range from €7,000 for single households up to €42,000 for families of five or more. Similarly, deposit limits that a debtor-household may hold are adjusted accordingly, starting at €240,000 and reaching €360,000. A prerequisite for these doubled limits is that the debtor must have an upper limit of already unserviced bank debts amounting to €300,000.