EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 22 May 2012 
on debt arrangements for over-indebted individuals 
(CON/2012/40) 
 
Introduction and legal basis  
On 19 April 2012, the European Central Bank (ECB) received a request from the Greek Ministry of 
Labour and Social Security for an opinion on a draft law on debt arrangements for over-indebted 
individuals (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an opinion is based on Article 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to rules applicable  to financial institutions insofar as they 
materially influence the stability of financial ins titutions and markets. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law introduces amendments to both: (a) Law 3869/2010
2 governing the procedures 
enabling over-indebted individuals to benefit fro m a debt arrangement under specific conditions, 
and (b) the Code of Civil Procedure. The E CB was previously consulted on Law 3869/2010 and 
issued Opinion CON/2010/34 on debt arrangements for over-indebted individuals3 in response.  
1.2 The draft law amends the conditions for applying to the competent court for a debt arrangement, by 
specifying that: (a) debtors may reach an out-of-cou rt settlement with their creditors prior to or 
following the submission of their application, pending final judgment by the competent court on such application; and (b) individuals regularly e ngaged in the conduct of commercial transactions 
will also be eligible for a debt arrangement subj ect to the following conditions: (i) they are self-
employed, (ii) they have not employed more than  one employee over the four years prior to making 
the application and, (iii) their debt from commercial transactions does not exceed a specific 
amount.  
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Law 3869/2010 on debt arrangements for over-indebted households and other provisions (FEK 130 A/3.8.2010). 
3  All ECB opinions are available on the ECB’s website www.ecb.europa.eu. 
ECB-PUBLIC  
2 1.3 In addition, the draft law specifies further certain procedural issues in relation to the submission of 
applications for a debt arrangement and the assessme nt of such applications by the courts. More 
specifically, it provides that in case of assignment of  creditors’ claims to third parties, assignees 
with no main residence or seat in the Hellenic Repub lic are obliged to appoint an agent pursuant to 
the relevant provisions of the Code of Civil Proce dure. This obligation is to apply retroactively. 
1.4 As regards debt arrangements for debtors whose as sets are not sufficient to repay the debt, the draft 
law extends from four to five years the maximum period during which the debtor may be obliged to 
pay a specific amount to satisfy his creditors’ claims  on a monthly basis. In such a case, where the 
debtor fails to make the payments imposed on him by the court, he must, within six years from submission of his application or within one year  from the court judgement, settle the outstanding 
amount plus the interest accruing from the date of such judgement. The applicable interest rate is 
2.5 percentage points higher than the interest ra te applicable to the ECB’s main refinancing 
operations. This measure will also apply retroactiv ely to pending applications. In exceptional cases, 
the court may limit the maximum arrangement period to three years. Due performance of the above 
obligations by the debtor will, in principle, r esult in him being released from any residual debts 
towards all his creditors. 
1.5 As regards the special procedure aimed at protec ting the debtor’s primary residence, the draft law 
allows for the extension of the maximum repayment period for the total debt from 20 to 35 years, 
in certain cases. The creditor may only institute enforcement proceedings with respect to the 
debtor’s sole place of residence if the debtor fa ils to honour the obligations imposed during such 
repayment period, by being at least four monthly instalments in arrears. 
1.6 The draft law also reinforces the debtors’ duty of  disclosure, stipulating that the consequences of 
infringing such duty will also apply where debtors de liberately omit creditors from their application 
for a debt arrangement.  
1.7 Finally, the draft law amends Article 982 of the Code of Civil Procedure in order to provide that 
debtor claims on deposits with credit institutions  up to an amount of EUR 1 500 for personal bank 
accounts and EUR 2 000 for joint bank accounts shall be exempt from seizure. 
 2. General observations 2.1 The ECB understands that the draft law aims to enhance the legal framework governing debt 
arrangement procedures with a view to improvi ng its effectiveness and ensuring the adequate 
fulfilment of its objectives. On the basis of the c onsultation request submitted to the ECB, the draft 
law aims to safeguard the interest s of credit institutions and debtor s, restoring trust between credit 
institutions and creditors and enhancing liquidity in the banking sector. Howeve r, in the absence of 
a thorough impact assessment of the propo sed changes, it remains doubtful whether these 
objectives will be achieved. Such assessment should ther efore be undertaken before the draft law is 
adopted. 
ECB-PUBLIC  
3 2.2 The ECB notes that the amended provisions are of unlimited duration and general application and 
govern existing legal relationships  between debtors and creditors,  such as credit institutions. 
Consequently, the observations made by the E CB in Opinion CON/2010/34 still apply to the 
proposed provisions. This is of importance given that the time which has el apsed since the adoption 
of the relevant legislation and the issuance of Opinion CON 2010/34 has seen  changes to the Greek 
financial system, which should be taken into consideration prior to the adoption of the draft law. 
2.3 It seems likely that several of the amendments may have negative implications for credit 
institutions in their capacity as creditors and these provisions should be thoroughly assessed before 
the adoption of the draft law. In particular, such  amendments may have a potential impact on both 
the capital adequacy and liquidity position of credit institutions as well as the functioning of the financial system. It is only by making such a prior assessment that it may be possible to mitigate such negative implications. In turn, this w ill safeguard financial stability, promote market 
efficiency and liquidity and support the adequate flow of credit to the economy
4. From a financial 
stability perspective, potential concerns impacting on credit institutions, wh ich need to be assessed 
from the outset, stem from the following provisions: (a) the proposed extension from 20 to 35 years of the maximum repayment period for debt rela ted to primary residences, (b) the proposed 
extension of the debt arrangement regime to self-employed persons regularly engaged in the 
conduct of commercial transactions, as described above
5, (c) the exemption from seizure of certain 
deposits with credit institutions6, and (d) the removal of the current requirement to first pursue an 
out-of-court settlement procedure, thereby making it possible to immediately file for a court procedure and for the stay of enforcement procedures. 
2.4 In this context, the ECB st resses that the proposed amendmen ts should be accompanied by the 
necessary safeguards to avoid moral hazard, as it is important that the debtor has an incentive to 
fulfil the payment obligations determined by the court settlement procedure. Against this 
background, the proposed interest rate to be applied in the event of non-fulfilment of such 
obligations seems to be too low to serve as a penalty  rate. In addition, no explanatory material on 
the background of this provision has been provided and this would be needed in order for a full 
assessment to be made.  
2.5 The ECB welcomes the reinforcement of the debtor s’ duty of disclosure and considers, in view of 
its importance for the stability of financial institu tions and markets, that the draft law could be 
further elaborated on in order to ensure that th e relevant legal framework takes into account the 
current needs of all stakeholders involved and will prove efficient in the long term. 
 
                                                 
4  See paragraph 2.2 of Opinion CON/2010/ 34. See also paragraph 2.3 of Opini on CON/2010/8 on restructuring of business 
and professional debts owed to credit instit utions and on credit bureau data processing. 
5  See paragraph 1.2 above. 
6  See paragraph 1.7 above. 
ECB-PUBLIC  
4 This opinion will be published on the ECB’s website.  
  Done at Frankfurt am Main, 22 May 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI