Opinion of the European Central Bank of 23 May 2013 on debt arrangements for over-indebted individuals (CON/2013/34)
Date: 2013-05-23
Institutions: European Central Bank
Subjects: Greece, debt, financial solvency, financial stability, indebtedness, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 23 May 2013 

on debt arrangements for over-indebted individuals 

(CON/2013/34) 

Introduction and legal basis 

On  30  April  2013,  the  European  Central  Bank  (ECB)  received  a  request  from  the  Greek  Ministry  of 

Development, Competitiveness, Infrastructure, Transport and Networks for an opinion on draft provisions 

reforming  the  framework  on  debt  arrangements  for  over-indebted  individuals  (hereinafter  the  ‘draft 
provisions’). The draft provisions comprise draft amendments to Law 3869/20101 (hereinafter the ‘draft 

amendments  to  Law  3869/2010’)  and  draft  provisions  on  the  establishment  of  a  forbearance  scheme 

aimed  at  supporting  individuals  in  deep  financial  distress  (hereinafter  the  ‘draft  provisions  on  the 

facilitation programme’). 

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 provisions2, as the draft provisions relate 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 provisions 

1.1  The draft amendments to Law 3869/2010 aim at enhancing the effectiveness of the existing legal 

framework  on  debt  arrangements  for  over-indebted  individuals  (hereinafter  also  referred  to  as 

‘debtors’).  To  this  end,  the  draft  provisions  redesign  the  procedure  for  debtors  to  apply  for  a 

judicial  arrangement  in  respect  of  their  due  debts.  The  court  hearing  concerning  applications  for 

such arrangements shall take place within six months of the date of submission of the application 

by  the  debtor. The  application  must  be  accompanied  by  documentation  regarding the  applicant’s 

assets, income and creditors, as well as those creditors’ claims. The creditors shall have the right to 

access the documentation included in the court file. 

1.2  During the two months following the submission of the application for a debt arrangement, debtors 

and  creditors  shall  be  required  to  negotiate  an  out-of-court  settlement.  The  settlement  shall  be 

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2  

Law 3869/2010 on debt arrangements for over-indebted households and other provisions (FEK 130 A/3.8.2010). 
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
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concluded  upon  the  approval  of  a  majority  of  the  creditors,  and  it  will  then  be  submitted  to  the 

competent court for validation. In the event of failure to conclude an out-of-court settlement on the 

expiry  of  the  abovementioned  two-month  period,  debtors  shall  be  required  to  continue  servicing 

their  debts  under  the  conditions  defined  by  the  competent  court,  pending  a  final  ruling  on  the 

application for a debt arrangement. Under certain circumstances, the court may also grant debtors 

protection  from  creditors  with  regard  to  enforcement  of  the  latters’  security.  Debtors  shall  be 

subject to an enhanced duty of disclosure, as penalties for the non-disclosure of other creditors are 

also laid down. 

1.3  The draft provisions on the facilitation programme allow individuals in financial distress to service 

their loans by paying reduced monthly instalments for a prescribed period of time. The facilitation 

programme shall apply exclusively to loans which have not fallen due, are secured on residential 

property and owed to credit institutions, financial institutions and credit companies. 

1.4  Those eligible for benefiting from the facilitation programme are individuals whose total household 

income  at  the  time  of  submission  of  the  application  has  fallen  by  at  least  20 %  compared  with 

2009. The draft provisions lay down additional eligibility criteria relating, inter alia, to the value of 

the  debtor’s  primary  residence  and  total  immovable  property,  as  well  as  to  the  total  annual 

household income. Debtors who benefit from the facilitation programme are subject to an ongoing 

duty  of  disclosure  of  their  financial  status,  and  failure  to  comply  with  that  duty  results  in  the 

debtor’s removal from the scheme. 

2. 

General observations 

The  ECB  welcomes  the  draft  provisions,  to  the  extent  that  they  seek  to  comprehensively  amend  the 

framework  on  debt  arrangements  for  over-indebted  individuals  currently  in  force,  in  line  with  the 

objectives outlined in the Memorandum of Economic and Financial Policies, as applicable from time to 
time3. In relation to the development of the abovementioned framework, the ECB refers to its previous, 
relevant  opinions4.  Without  prejudice  to  this  general  observation,  the  ECB  has  the  following  specific 

observations. 

3. 

Specific observations 

3.1  The  ECB  reiterates  that  the  reform  of  the  framework  on  debt  arrangements  for  over-indebted 

individuals should ensure an adequate balance between, on the one hand, observance of the general 

duty  of  debtors  to  meet  their  payment  obligations,  which  promotes  a  prompt  payment  culture, 

preserves  the  soundness  of  Greek  credit institutions  and  prevents  moral  hazard and,  on the  other 

hand, the need to provide assistance to individuals in dire financial situations. In this respect, the 

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4  

Annex  V  to  Law  No  4046/2012  on  the  approval  of  the  draft  financing  agreements  between  the  European  Financial 
Stability Fund, the Hellenic Republic and the Bank of Greece and of the draft Memorandum of Understanding between 
the Hellenic Republic, the European Commission and the Bank of Greece and other provisions of utmost importance for 
reducing the public debt and saving the national economy (FEK A 28/14.12.2012). 
See ECB Opinions CON/2010/34 and CON/2012/40. 

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proper and swift implementation of the envisaged framework, both by the authorities administering 

the schemes and by credit institutions and other entities affected by them, is of crucial importance 

for ensuring the abovementioned balance and thereby preventing serious adverse consequences for 

banks’ capital and liquidity positions. Proper implementation of the envisaged framework involves, 

inter alia, devoting sufficient resources and ensuring the establishment of efficient procedures for 

facilitating the conclusion of out-of-court settlements. 

3.2  The ECB welcomes the determination of appropriate time limits for the negotiation of out-of-court 

settlements  and  for  the  hearing  of  debt  arrangement  applications,  as  a  means  to  accelerate  the 

procedure.  The  ECB  understands  that  the  arrangements  for  debts  that  have  fallen  due  require 

proper  consideration  by  the  competent  courts,  as  a  means  to  ensure  that  arrangements  are  sound 

and workable. Moreover, the ECB welcomes the reinforcement of the debtors’ duty of disclosure 

by also laying down penalties for the non-disclosure of other creditors. 

3.3  At  the  same  time,  there  are  certain  prerequisites  which  are  necessary  for  the  effectiveness  of  the 

framework. First, the draft provisions should ensure the proper verification of the documentation to 

be  submitted  with  the  applications  for  debt  arrangements.  Second,  the  draft  provisions  should 

emphasise  that  the  granting  of  debt  arrangements  shall  be  subject  to  the  strict  observance  of  the 

duty of disclosure throughout the entire duration of the arrangement. Third, effective, proportionate 

and  dissuasive  penalties  should  be  applicable  in  cases  of  fraud  or  gross  negligence.  Finally,  an 

independent body should regularly assess the efficacy of the facilitation programme and its impact 

on Greek credit institutions. 

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

Done at Frankfurt am Main, 23 May 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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