Out-of-Court Debt Settlement Mechanism

The out-of-court debt settlement mechanism (Law 4738/2020) allows a person's debts to the State, to the social security funds and to financial institutions to be settled as a whole, through a single electronic procedure. Our firm specialises in the strand concerning debts owed to the State.

The settlement of debts to the State may extend to as many as two hundred and forty (240) instalments, while the law also provides for the possibility of writing off part of the principal debt, which may not exceed seventy-five per cent of it. Debts arising from withheld and passed-on taxes are not subject to write-off. The outcome in each case is produced by the statutory calculation tool, on the basis of the applicant's financial data.

Our firm handles the procedure from beginning to end, with knowledge of every critical detail, for both individuals and legal entities.

Typical cases

• Individuals and businesses with overdue debts to the Tax Administration
• Debtors facing third-party garnishments, particularly of bank accounts
• Debtors considering whether inclusion is to their advantage compared with other available settlement schemes

The process, step by step

1. Review of the conditions and assessment of the case
   We examine whether the debtor meets the conditions for inclusion, what outcome can broadly be expected, and whether inclusion entails any risks for them.
2. Starting the procedure
   We create the application on the electronic platform and gather the data and supporting documents required.
3. Finalising the application
   The application is submitted definitively, with the full set of required information.
4. Decision on the settlement proposal
   We examine the proposal produced and support the debtor in the decision whether to accept or reject it.
5. After the settlement
   We provide legal support and guidance on keeping up with the instalments, as well as on filing the request for examination of whether third-party garnishments may cease to capture future claims.