Greece debt settlement: Extrajudicial mechanism gains traction

Debtors in Greece are increasingly choosing between the extrajudicial mechanism and the 72-installment plan to settle debts owed to tax authorities and social security funds. The extrajudicial mechanism has seen significant traction, with over 97,000 applications submitted for fund-related debts. Currently, more than 60,000 of these arrangements are active, while approximately 3,600 have been completed and 34,000 have been lost.

Interest in the extrajudicial mechanism has grown particularly after it was expanded to include debts exceeding 5,000 euros. This option allows for repayment over up to 240 installments (20 years) and offers the possibility of debt reduction or 'haircuts.' However, it requires a comprehensive review of the applicant's financial and asset status.

In contrast, the 72-installment plan has seen lower participation, with approximately 11,000 applications for insurance debts and 14,000 for tax debts submitted since its launch. This plan is simpler but has notable limitations: it only covers overdue debts created up to December 31, 2023, does not allow for the cancellation of surcharges (which are instead capitalized into the total debt), and requires any debts created from January 1, 2024, onwards to be settled via a separate 24-installment arrangement.