Out-of-court settlement mechanism: Who can save their home with the new Pierrakakis regulation – See examples

The new regulation announced by Minister of National Economy and Finance Kyriakos Pierrakakis aims to help debtors save their primary homes through an out-of-court settlement mechanism. Previously, all assets were considered together, leading to higher installments and limited debt write-offs. Now, debtors can choose to protect only their primary residence, allowing other assets to be liquidated as part of the settlement. This means settlement proposals will be based solely on the value of the primary residence, leading to potentially larger “haircuts” and lower monthly payments, especially when the property’s value is less than the total debt.

For example, a debtor with a house and a holiday home totaling €250,000 in value and €200,000 in debt will now have the option to protect only their primary residence, with the holiday home being liquidated. This will base the settlement on the value of the main house alone. Similarly, those with a primary residence worth less than their total debt can expect a more significant debt reduction.

However, the regulation offers limited benefit to those who own only one residence, as the settlement is already based on its value. The application process remains the same, with debtors choosing to save their primary residence and agreeing to the liquidation of other assets through e-auctions. The regulation aims to provide both home protection and a solution for secondary properties that previously burdened settlements.

(Source：Protothema)