Ref. No.: 7698/20.8.2015 – Interpretative Circular on Law 3869/2010 “Regulation of debts of over-indebted natural persons and other provisions” (A’ 130), as amended by Articles 1 to 4 of Chapter A of subparagraph A4 of paragraph A of Part B of Law 4336/2015 “Pension provisions – Ratification of the Draft Financial Assistance Agreement by the European Stability Mechanism and arrangements for the implementation of the Financing Agreement” (A’ 94). Category: Collection of Public Revenues. Athens, 20/8/2015. Ref. No.: 7698. HELLENIC REPUBLIC – MINISTRY OF ECONOMY, INFRASTRUCTURE, SHIPPING AND TOURISM, Minister’s Office.

The prolonged economic crisis, affecting an ever-increasing number of citizens, has led to a growing number of applications for judicial protection under Law 3869/2010 (“Katseli Law”). The aim is to modernize this legal framework so as to enhance its effectiveness and ensure timely judicial decisions. The improvement of the institutional framework is expected to contribute to the efficient functioning of the justice system, the prompt provision of judicial protection to entitled citizens, and the safeguarding of a dignified standard of living, while limiting abusive practices.

Specifically, by paragraph 1 of Article 1, which replaces Article 1 of Law 3869/2010, it is clarified that the provisions apply to all natural persons lacking bankruptcy capacity, including employees, unemployed persons, self-employed individuals, and former traders who, at the time of filing the application, have lost such capacity and are not subject to bankruptcy proceedings. These persons must be in a general and permanent inability to service their debts. It is further clarified that overdue debts may be included, while cases involving fraudulent bankruptcy are excluded. The scope of the law is extended to include debts to the State, tax authorities, local authorities and social security institutions. Where debts to the State have already been subject to another regulatory framework, the debtor may choose whether to remain in that framework or to be included under Law 3869/2010, but parallel use of multiple frameworks is not permitted. Debts arising from intentional acts, gross negligence, criminal offences, monetary penalties or administrative fines are excluded, including debts from non-payment of VAT. Obligations relating to maintenance of a spouse or minor child are also excluded. Additionally, debts must not have been incurred within one year prior to the filing of the application, and debts to the State must coexist with debts to private creditors.

By paragraph 2 of Article 1, which amends Article 2 of Law 3869/2010, public authorities are required to issue certificates of debts for inclusion in the regulation. This provision applies primarily to new applications but also, under transitional provisions, to pending cases where no judicial settlement has been reached, allowing resubmission to include debts to the State.

Paragraphs 3 and 4 of Article 1, amending Article 4 of Law 3869/2010, set out the application procedure and required documentation. A legislative authorization is provided for the issuance of a Joint Ministerial Decision specifying standardized application forms and required documents. The application must include either a debt settlement plan or, where applicable, a request for debt discharge, accompanied by a sworn declaration regarding the accuracy of the information.

Paragraphs 5 and 6 regulate the administrative process of submission, review and handling of applications by the court registries. If documents are missing, the debtor is invited to submit them within fifteen (15) days; otherwise, the application is archived without a hearing date.

Further amendments establish procedural deadlines: the hearing date must be set within six (6) months from completion of submission; service to creditors within fifteen (15) days; confirmation within two (2) months; hearing procedure within four (4) months from interim order; and suspension of enforcement measures not exceeding six (6) months. If delays occur without fault of the debtor, a new request for suspension may be submitted.

The debtor is obliged to satisfy creditors proportionally on a monthly basis according to the approved repayment plan or interim order, while limitation periods are suspended. The concept of “reasonable living expenses,” as determined by the Hellenic Statistical Authority (ELSTAT), is introduced, ensuring that only income exceeding these expenses is allocated to creditors.

Failure to comply with payment obligations, specifically non-payment of three instalments within the same year, results in termination of the suspension of enforcement measures.

A fast-track procedure for small debts is introduced for debtors meeting specific criteria (total debts up to €20,000, no income, no real estate, minimal assets, and cooperative borrower status). This allows for immediate debt discharge, followed by an 18-month monitoring period. Any concealment of assets results in revocation of the discharge.

Further provisions clarify the application of the law to private debts, improve rules on liquidation of assets (excluding the primary residence), and introduce criteria for the protection of the primary residence based on income, property value and total debt. A Joint Ministerial Decision will define thresholds, while transitional provisions maintain previous rules until then.

Additional amendments introduce the concept of the cooperative borrower, establish an integrated information system for courts, and require pending applicants to update their documentation, failing which they lose protection. Cases scheduled beyond three years must be rescheduled to earlier dates.

Finally, provisions are introduced to establish new court departments and increase judicial staff to address the backlog of cases.

Entry into force: The provisions entered into force upon the signing of the Financial Assistance Agreement on 19 August 2015.

The General Secretary
Ilias Xanthakos