Greece protects homes by liquidating other assets
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In Greece, debtors can now use a new process within the Out-of-Court Settlement Mechanism to protect their primary residences from foreclosure.
Borrowers can request their main home be excluded from their total assets, so repayment plans are calculated based only on the home’s value. This results in lower payments and larger debt forgiveness, but requires the borrower to sell any other properties they own. Creditors must offer this alternative arrangement to vulnerable debtors, who can then accept or reject it.
For example, a debtor with €300,000 in debt, a primary residence worth €150,000, and other properties worth €50,000 can apply to the platform. The platform separates the primary residence from the other assets, and the debtor agrees to sell the additional properties. The process calculates a new debt based solely on the value of the primary residence.
In the example, the debtor’s debt is reduced by €150,000 through this method, leaving a balance of €150,000 to be repaid over a period of up to 35 years. Once an agreement is signed, creditors are prohibited from auctioning the primary residence, as long as the debtor adheres to the terms of the plan.
