Opinion of the European Central Bank of 23 April 2010 on debt arrangements for over-indebted individuals (CON/2010/34)
Date: 2010-04-23
Institutions: European Central Bank
Subjects: Greece, financial solvency, financial stability, indebtedness, national law, redemption

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 23 April 2010 

on debt arrangements for over-indebted individuals 

(CON/2010/34) 

Introduction and legal basis 

On  25  January  2010  the  European  Central  Bank  (ECB)  received  a  request  from  the  Greek  Ministry  of 

Economy,  Competitiveness  and  Shipping  for  an  opinion  on  a  draft  law  on  debt  arrangements  for  over-

indebted  individuals  (hereinafter  the  ‘draft  law’).  On  12  February  2010  the  Ministry  submitted  an 

addendum  to  its  consultation  request  with  some  clarifications  and  additional  information  on  specific 

aspects of 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  Central  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  institutions  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 

According  to  its  explanatory  memorandum,  the  draft law  draws  on  similar  legislation  in  other  Member 

States  and  fills  a  significant  gap  in  Greece’s  current  insolvency  legislation.  In  particular,  it  introduces 

procedures  to  enable  over-indebted  natural  persons,  who  are  not  merchants  for  the  purposes  of  the 

existing bankruptcy framework and who have a proven and continuing inability to service their pecuniary 

debts that have fallen due to credit institutions and other creditors, to seek to repay such debts under more 

favourable conditions and to obtain debt relief where there are no assets available for the repayment of 

such  debts  or  where  their  current  and  expected  income  is  not  sufficient  for  that  purpose.  The  draft  law 

also  contains  special  provisions,  such  as  the  possibility  for  debtors  to  request  the  exclusion  of  their 

primary residence from realisation of their assets, and the possibility of a judicial settlement without debt 
relief  where  a  debtor  is  temporarily  unable  to  service  their  debt2.  Finally,  the  draft  law  contains  a 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Articles 9 and 10 of the draft law. 

 
 
 
 
                                                 
provision  on  the  period  of  retention  and  use  of  data  in  relation  to  the  debt  repayment  arrangements 
introduced therein3. 

2. 

General observations 

2.1  The  ECB  understands  that  the  draft  law  introduces  these  insolvency  arrangements  as  part  of  a 

comprehensive  legal  framework  of  unlimited  duration  and  general  application.  As  the  draft  law 

applies to debtors and, among other things, governs their relationships with credit institutions, the 

new legal framework should be clear as to the rights and obligations it creates and should take into 

account  existing  legal  relationships  between  credit  institutions  –  including  in  their  capacity  as 

mortgage lenders – and their debtors, thus ensuring legal certainty. 

2.2  To the extent that the draft law provides for the medium and longer term repayment of and relief 

from debts owed to credit institutions, such repayment and relief arrangements should contain the 

necessary safeguards to prevent them having implications for financial stability. Such arrangements 

should  also  cater  for  possible  interaction  with  the  other  similar  legislative  arrangements  already 

adopted by the Greek Government to address the current adverse economic conditions. In view of 

the above, the ECB stresses the importance of making a thorough prior assessment of the impact of 

the draft law on the functioning of the financial system so as to safeguard financial stability and it 
refers to its recent Opinion CON/2010/84, on restructuring of business and professional debts owed 

to credit institutions and on credit bureau data processing, which is also relevant for the purposes of 

the draft law.  

2.3  Finally,  the  ECB  considers  that  the  proposed  framework  needs  to  be  clear  in  providing  the  right 

incentives to debtors falling within its scope to service their debts appropriately and that it should 

contain  sufficient  safeguards  to  avoid  moral  hazard,  as  this  could  have  serious  adverse 

consequences on banks’ capital and liquidity positions, as well as on the overall cost of financing. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 23 April 2010. 

[signed] 

The Vice-President of the ECB 

Lucas D. PAPADEMOS 

3  
4  

Article 16 of the draft law. 
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

2