Debt settlement

The number of new applications submitted by debtors to the platform for the out-of-court settlement mechanism reached 7,360 in February.

The number of new applications in February was more than double the number of applications in previous months - the average in 2023 was 3,400 new applications per month - and is a record high, according to a Finance Ministry announcement on Friday.

The government is using a carrot-and-stick approach to increase debt settlements through the out-of-court mechanism: It is tightening penalties in cases of noncompliance through provisions to be included in a bill to be tabled in Parliament around end-September.

One in every three debtors who apply for out-of-court debt settlement reject the terms they are offered resulting from the platform's algorithm. Most of them claim that the terms are too harsh, while a significant number estimate that it is not in their interest, so the government is understood to be considering new interventions.

Eight out of 10 applications submitted under the new 36- to 72-installment arrangement are rejected by the electronic system of the tax administration, as those interested in joining it usually do not meet the terms and conditions. The biggest problem they face concerns the condition of not having any unregulated debts before November 2021.

"The latest data on the course of the Extrajudicial Debt Settlement Mechanism prove that it is now functioning satisfactorily," Finance Μinister Christos Staikouras said on the occasion of the publication of the progress report of the out-of-court settlement mechanism. 

The Finance Ministry anticipates fresh debt settlements from banks and management organizations over the next five months, ranging from 1.5 to 1.8 billion euros through the out-of-court settlement mechanism. 

The Development and Investment Ministry on Wednesday launched the digital platform kataggelies.mindev.gov.gr, where consumers can submit complaints, in order to more effectively control phenomena such as overcharging, fake discounts and other violations at the expense of consumers in the market.

Taxpayers and companies with debts to the state have until Thursday to apply for re-entering the payment plans of 100-120 tranches, and must also pay December's installment.

The tranches missed as a result of the pandemic - from March up to November - will be added after the end of the debt settlement program.

The average amount of debts that households cannot service is about BGN 2200, announced one of the large debt collection companies in Bulgaria. The biggest debts are piled up in major cities and in the northwestern Bulgaria.

The second lockdown, imposed in the country just a month ago resulted in a new decrease in debt payments to banks, telecommunications companies and fast loans.

The government will submit to Parliament in September a new payment schedule for debts to the state incurred during the coronavirus pandemic.

These new debts will be paid either in 12 interest-free installments in 2021 or 24 low-interest installments. The amount of unpaid taxes and previous debt settlements that froze during the period from March to May exceeds €2 billion.