November 2025 – Significant debt write-off through the Out-of-Court Debt Settlement Mechanism

Our client, a former entrepreneur in the clothing sector, found himself facing aggressive actions by a receivables management company, which terminated two loan agreements and threatened the immediate issuance of payment orders and seizure of his mortgaged parental residence. The terminations were successfully repelled in time due to the lack of co-notification of the powers of attorney of the persons who had signed them. Subsequently, communication was sought with the management company in order to achieve, out of court, the best possible settlement of the debts, taking into account the low value of the mortgaged property. However, in view of the company’s inflexible stance and its insistence on non-viable terms, we proceeded with the debt settlement procedure through the platform of the Out-of-Court Debt Settlement Mechanism and the issuance of a vulnerable debtor certificate, pursuant to Law 4738/2020.

Through the restructuring agreement that was posted, for total debts to credit institutions, the State and social security funds amounting to €533,872.37, a write-off of €298,506.28 (55.91%) was achieved. For the two loan agreements that were the subject of the recent termination, an additional debt write-off of 53.6% was achieved, while the total amount of the new monthly installment for all debts remained at the same level as that initially proposed by the management company for the two disputed agreements only. In conclusion, the Out-of-Court Debt Settlement Mechanism emerges as one of the most effective tools for the financial restoration and rehabilitation of natural and legal persons. Through an institutionally established and fully transparent process, it provides the possibility of an overall settlement of debts to banks, the State and insurance funds, on terms corresponding to the debtor’s actual financial capacity. This procedure prevents auctions and compulsory executions, achieving significant write-offs and viable settlements, without the need for time-consuming and costly judicial actions. As evidenced in the present case, the Out-of-Court Debt Settlement Mechanism offers a second chance for financial restart and substantial protection against the aggressive practices of management companies, which often persist in unreasonable claims and non-viable proposals for debtors.