The Five (5) Key Points Of Law 5193/2025 Regarding The Out-Of-Court Debt Settlement Mechanism

(republished from taxheaven.gr)

Summary: Law 5193/2025 introduces new changes to the out-of-court debt settlement mechanism, aiming to increase the number of successful settlements through the digital calculation tool, improve its functionality, and simplify the process for debtors—particularly in relation to criminal liability for debt non-payment post-settlement.

Introduction

On 10 April 2025, the Hellenic Parliament passed Law No. 5193/2025, which brought significant (and repeated) changes to the out-of-court debt settlement procedure under Law 4738/2020. This article examines the key amendments and their impact on the debt settlement process.

The Five Changes

1. The first change concerns situations where the consent of all creditors (State, Social Security Funds, financial institutions) to the proposal generated by the computational tool is presumed (referred to in the law as the "creditors' counter-proposal under Article 71 para. 2A of Law 4738/2020").

Until this law was passed, the only case where such creditor consent was presumed was when the application was submitted by a vulnerable debtor (certified as such). For the criteria used to define a vulnerable debtor and the associated benefits, see our previous analysis (see here).

This new law introduces a second case—beyond that of the vulnerable debtor—where creditor consent is presumed. Specifically, Article 178 adds item (b) to para. 3 of Article 14 of Law 4738/2020, providing: "For debtors who [...] (b) meet up to twice the income and asset thresholds of a vulnerable debtor under Article 217(a), have overdue debts—either wholly or partially—for at least ninety (90) days as of the effective date of this law to financial institutions up to €300,000, and are classified as eligible debtors, the consent of all creditors is presumed regarding the resulting counter-proposal under Article 71 para. 2A, including financial institutions, the State, and Social Security Funds."

Important clarifications on this provision include:

a) The classification as a vulnerable debtor depends on income, asset thresholds, and household composition. For example, a single-person household is considered vulnerable if the annual income does not exceed €7,000, bank deposits also do not exceed €7,000, and real estate (based on ENFIA valuation) does not exceed €120,000. These thresholds increase for each additional household member. Household members include dependents (under the Income Tax Code) and others hosted by the debtor as declared in the last income tax return.These thresholds double for individuals with disabilities above 67%. Thus, the new limits under item (b) match those set for people with disabilities above 67% and for a single-person household are:

b) The debtor must have overdue debts—wholly or partially—to financial institutions of up to €300,000. This threshold includes both fully overdue and partially overdue debts (provided at least 90 days have passed since the payment was due). For instance, if a person has a loan of €150,000 with only €10,000 overdue (across 5 installments), the full loan amount is considered in the €300,000 threshold calculation.

c) These debts must have been overdue for at least 90 days on the law's effective date—14 April 2025. This is a one-off provision, not an ongoing right. Therefore, if a debtor's debts become overdue for more than 90 days after 14 April 2025, they will not benefit from the expanded criteria.

2. Debtors eligible under the new Article 14 para. 3(b) are allowed, based on the transitional provision in Article 185 of Law 5193/2025, to resubmit an application within two months of the law's effective date—if a prior application was rejected but they now meet the new expanded criteria.

3. The same two-month resubmission window applies to legal entity debtors who previously received a settlement proposal based on the presumed 10% profit margin on turnover(as defined in Joint Ministerial Decisions 77522 EX 3.6.2024 for bilateral procedures and 77697 EX 2021, recently amended by 43666 EX 13.3.2025 for multilateral procedures—see here), and who lost their settlement due to non-payment of at least 3 installments by the law's effective date.

4. A related amendment to Article 25 of Law 1882/1990 on criminal prosecution for debt non-payment to the State now provides that,where a debt is settled (including through the out-of-court mechanism), no prosecution request will be filed. If prosecution has already commenced but the settlement is still active, the court will order its cessation.

5. Finally, concerning a debtor's request—post-admission to the out-of-court mechanism—for suspension of third-party seizures (future effect only), the law now requires submission of income tax and VAT returns for the past five years, even if late, but at least before the application to the mechanism. This is more favorable than the prior rule under Article 23 of Law 4738/2020, which required submission within three months after the deadline.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.