When Greece’s financial meltdown unfolded in 2009, a jewellery shop owner on the outskirts of Athens found himself burdened with a new €100,000 loan at the worst possible moment - just as his business income plunged. That debt moved between banks as the sector restructured and ultimately landed with a credit servicing company that rejected his request to switch to more manageable instalments. The case is now caught in the courts, part of an immense backlog that has slowed borrowers' ability to regain full access to the banking system.
The shop owner, who asked not to be identified, says the unpaid interest has doubled his balance over time. "I have had a rope around my neck for 16 years. I’m trapped," he said. "I can’t take a new loan to pay the old one, to invest in my business, or even issue a credit card." His story illustrates how individual disputes aggregate into a broader economic drag: would-be homeowners and entrepreneurs remain unable to obtain new financing until long-dormant debts are resolved, a process that can stretch for years.
Greece’s economy has posted a strong rebound in recent years and is growing faster than the EU average, yet a substantial stock of unresolved non-performing loans is limiting a full recovery. Data from the government and servicing companies show about 1.5 million citizens - almost a quarter of the adult population - are effectively excluded from normal banking services. Nearly half of those affected are small business owners, according to the same figures.
Authorities and industry observers estimate that roughly €75 billion is currently immobilised by legal disputes or delays in settlements handled by credit servicers - an amount equivalent to almost one-third of Greece’s GDP. "An economy cannot grow sustainably if such a large part of society has no access to financing, investment instruments, business loans or credit cards," said Nana Papadogeorgaki, a lawyer representing dozens of small business owners.
The judicial logjam has been a key factor in the problem. The justice ministry says reforms to the civil code and hiring 1,000 additional judges have markedly shortened processing times. It reported that average case durations fell to 315 days from about 1,200 days two years earlier, and that outstanding loans are expected to be settled by 2028. However, officials, lawyers and experts who work with affected borrowers say the picture is more complex and that many disputes will take considerably longer to conclude.
Some practitioners highlight much longer waits in certain cases. "There are still huge delays - not 700 days but many more, in some cases it may reach up to 1,000 days," Papadogeorgaki said. She added that there are individual matters scheduled to be examined in court as late as 2035.
The pathway that placed so many loans in limbo began in 2015, when Greece enacted a legal framework under pressure from international creditors. The law enabled banks to move more than 90% of their bad loans - some €110 billion - to specialised credit servicing companies. Yet the market for handling these non-performing assets did not operate effectively for five years, in part because of administrative setbacks.
Most of the transferred loans were secured by real estate, and in many cases the collateral was a borrower’s primary residence, which enjoys legal protections. Faced with the prospect of losing their homes, many borrowers litigated to forestall repossession. "This is one of the biggest problems for the quick settlement of bad loans," said Theoni Alambasi, general secretary of private debt at the finance ministry.
International institutions that supported Greece during the crisis, including the IMF and the EU, have repeatedly criticised the slow pace of resolution. In March, an IMF official called for further reforms to accelerate settlements, reflecting concern about the drag that unresolved debts impose on economic dynamism.
Servicers point to the legal environment as a limiting factor on their operations. The Hellenic Loan Servicers Association, which counts companies such as Do Value and Intrum among its members, told Reuters that where servicers’ activity is heavily dependent on legal processes - and where rulings can be inconsistent or conflicting - outcomes are significantly affected.
Borrowers provide a human face to the statistics. A small hotel owner on Crete who obtained a loan of about €1.2 million in the early 2000s said his servicer is now demanding roughly €2 million to be paid over the next two years. "We will die without ever repaying our debts," he said, adding that his business cannot even afford to replace an old air-conditioner.
The combined effect of judicial delays, legal protections for primary residences and the slow ramp-up of the bad-loan servicing market means that many citizens and small companies remain shut out of credit. Servicers and government officials provide differing timelines for resolution: the ministry points to improved court throughput and a target to clear outstanding loans by 2028, while practitioners and some servicers warn that many cases will remain unresolved for several more years.
Until those legal and administrative impediments are overcome, a significant share of Greek household and business balance sheets will continue to be immobilised, constraining borrowing capacity and restraining some channels of investment and consumption that underpin a fuller economic recovery.