The Supreme Court of Greece supported borrowers under the “Katseli Law”

Solution Άρειος Πάγος (Greek Supreme Court) affects about 250 thousand individuals and order 200 thousand first residential propertieswho received protection under “Katseli’s law”having settled loans amounting to approximately 12.5 billion euros.

As legal sources explain, These borrowers now “gain the legal right” to demand repaymentwhich for many years were accrued to them additionally and led to an inflated total debt.

Due to this banks and funds, those who purchased these loans will have to begin recalculating their liabilities, to bring them into line with the court’s decision. The Supreme Court ruled that the basis for calculating interest should be monthly paymentand not the entire amount of outstanding capital.

Most of these loans were included in the government guarantee mechanism “Ηρακλής”. The change in the calculation methodology leads, according to the funds, to potential losses of about 1.3 billion eurossince it significantly reduces the total amount of debt.

An illustrative example of a loan in 100.000 euros under 3% for a period of 20 years. When interest is calculated on the entire capital, the total amount of debt reaches 135,000 euros, and the monthly payment is about 560 euros. By calculating interest only on the monthly payment, the payment amount is reduced to 416 euros, and the total interest amount is reduced to approximately 3,000 euros for the entire term.

The court proceeded from the fact that, under Law 3869/2010 (“Katzeli Law”), the first apartment was protected after adjusting the debt to the market value of the property. Thus, with a debt of 150,000 euros and a housing cost of 100,000 euros, 50,000 euros were allowed to be written off, and the remaining amount was restructured for a period of up to 20 years with a fixed payment.

In practice, banks calculated the debt as an annuity loan, increasing both the total amount and monthly payments beyond those established by the court. This led to massive lawsuits and appeals to the Plenum of the Supreme Court to eliminate legal uncertainty.

The plenum of the Supreme Court, as part of a pilot process, ruled by a majority vote (35-12) that interest should be charged on the monthly payment, as the borrowers insisted, and not on the entire balance of the debt, as banks and funds demanded.

The second key question remains the possible retroactive effect solutions. The question is whether previously inflated amounts already paid will be recalculated. The final answer will be given after the publication of the full text of the court decision.

The story of the case began with a request Ειρηνοδικείο Ιωαννίνων (Ioannina Magistrates’ Court). In February 2025, former Supreme Court prosecutor Giorgi Adeilini supported the position of the borrowers, and her reasoning was taken into account by the majority of judges.

“The main criterion is to ensure a decent standard of living for the debtor and his family, combining maximum satisfaction of creditors’ claims with the protection of human dignity and maintaining a minimum level of well-being,” – noted Giorgi Adeilini.

Borrower representatives argued that banks and debt management companies were effectively distorting the protective nature of the law by creating excessive financial burdens that were inconsistent with court decisions.

“The decision of the Plenum is an institutional and social milestone. It confirms that judicial protection is not a formality, but a real guarantee,” – stated Dimitris LyritsisMember of the Council of the Athens Bar Association.

At the same time, banking circles express fears that similar demands may be put forward by other categories of debtors, including participants in out-of-court procedures. In addition, some experts believe that the new methodology actually reduces the profitability of lending and may lead to stricter conditions for issuing loans.

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