The Greek government has responded to criticism over the judicial protection of borrowers through an informal briefing on proposed legislation concerning non-performing loans, arguing that the planned measures strengthen debtors’ rights and introduce stricter obligations for loan servicers.

At the centre of the debate is a provision that would allow debt restructuring agreements to serve as directly enforceable legal instruments. According to the government, such agreements require the consent of both creditors and borrowers, while the right to judicial review remains intact.

The briefing also outlines provisions granting borrowers free access to information about their debts, new opportunities for bilateral restructuring agreements and additional mechanisms to protect primary residences.

Particular emphasis is placed on vulnerable borrowers, the interim state support programme and the Property Acquisition and Leaseback Agency.

The government argues that faster procedures could help borrowers avoid additional interest charges and legal costs, provided they are accompanied by adequate transparency and legal safeguards.

Loan servicers cannot unilaterally create enforceable debt instruments

The government rejects claims that the proposed legislation would allow loan servicers to initiate enforcement proceedings without judicial oversight.

According to the briefing, the provision applies exclusively to debt restructuring agreements voluntarily concluded between creditors and borrowers.

It does not automatically transform an original loan agreement into an enforceable instrument, nor does it grant servicers unrestricted authority to pursue debt enforcement.

The borrower’s consent remains a prerequisite.

The government’s stated objective is to eliminate the need for an additional legal procedure to obtain an enforceable title when both parties have already agreed on the restructuring terms.

Borrowers retain the right to judicial protection

The government also disputes claims that the proposed changes would eliminate borrowers’ access to the courts.

It distinguishes between obtaining an enforceable title and the subsequent right to challenge enforcement proceedings through judicial review.

Article 933 of Greece’s Code of Civil Procedure allows debtors to file objections against enforcement proceedings, including challenges concerning the validity of the enforceable title, the enforcement process and the underlying claim.

According to the government, judicial protection does not depend exclusively on the prior issuance of a payment order.

Creditors also remain responsible for substantiating their claims and demonstrating compliance with the agreed contractual terms.

Free access to debt records and payment histories

Another provision highlighted by the government concerns borrowers’ access to detailed information about their outstanding debts.

Under the proposed framework, borrowers would be entitled to obtain, free of charge, documents relating to their obligations, their payment histories and a breakdown of individual charges.

The measure is intended to allow debtors to verify outstanding balances, understand how their debts have accumulated and confirm that previous payments have been properly recorded.

The government argues that greater transparency is essential to ensuring fair and sustainable restructuring agreements.

More opportunities to restructure outstanding debts

The proposed legislation would also expand the options available to borrowers seeking repayment arrangements.

Debtors would continue to be able to seek comprehensive restructuring through Greece’s extrajudicial debt settlement mechanism.

If that process fails to produce an agreement, they would have the option of pursuing a new bilateral restructuring procedure.

A transitional provision would also provide another opportunity for borrowers who have previously exhausted available restructuring options without reaching an agreement.

According to the government, these additional routes are designed to facilitate sustainable settlements and reduce the likelihood of compulsory enforcement proceedings.

Additional safeguards for primary residences

Protecting borrowers’ primary residences is another central element of the government’s proposals.

The framework envisages arrangements linking the amount a debtor must repay to the value of their primary residence, subject to specific conditions and the possible liquidation of secondary properties.

For vulnerable debtors who cannot afford even these payments, a separate mechanism would be available through the Property Acquisition and Leaseback Agency.

Under this arrangement, eligible borrowers could remain in their homes as tenants after their properties have been acquired by the agency, in accordance with the applicable rules.

Until the agency becomes fully operational, an interim support programme provides eligible borrowers with a suspension of enforcement proceedings and state financial assistance, subject to the programme’s eligibility requirements.

The government maintains that these mechanisms offer additional ways of protecting housing while taking borrowers’ actual financial circumstances into account.

Government argues prolonged procedures can increase borrowing costs

The government also maintains that lengthy legal and administrative proceedings do not necessarily provide greater protection for borrowers.

It argues that delays can increase outstanding debts through additional interest charges, legal expenses and other costs.

Where a restructuring agreement has already been reached, requiring further procedures to obtain an enforceable title could ultimately prove financially disadvantageous for the borrower, according to the briefing.

Nevertheless, the government acknowledges that faster procedures must be accompanied by legal certainty, transparency and effective access to judicial review.

The wider implications for borrowers

The government presents the proposed framework as an attempt to combine more flexible debt restructuring arrangements with stricter obligations for loan servicers and stronger safeguards for borrowers.

It argues that the effectiveness of borrower protection should be assessed through the rights available to debtors, their access to sustainable repayment arrangements and their ability to challenge enforcement measures.

The stated objective is to ensure that borrowers can obtain a clear picture of their financial obligations, negotiate viable repayment terms, protect their primary residences where eligible and exercise their legal rights.

These arguments reflect the government’s assessment of the proposed measures and its response to criticism raised during parliamentary discussions.