Personal insolvency in Cyprus: repayment plans and debt relief
When an individual in Cyprus can no longer pay debts as they fall due, there are three legal routes besides private negotiation with creditors. The Insolvency of Natural Persons Law of 2015 (Law 65(I)/2015) introduced two procedures modelled partly on Irish law. A Debt Relief Order (Διάταγμα Απαλλαγής Οφειλών) is designed for people with low income and few assets whose eligible unsecured debts, such as credit cards, overdrafts and utility bills, do not exceed €25,000 in total; after a supervision period the remaining eligible debts are written off. A Personal Repayment Plan (Προσωπικό Σχέδιο Αποπληρωμής) is prepared with a licensed insolvency practitioner and proposed to creditors; it can restructure secured and unsecured debts and, in certain conditions, protect the debtor's primary residence, and while it is being prepared the court can issue a protective order that stops enforcement. In defined cases, if creditors reject a fair plan concerning a primary residence worth up to €350,000, the court can impose it. The third route is bankruptcy under the Bankruptcy Law, Cap. 5. This guide explains how to assess your situation, which procedure fits, what the insolvency practitioner and the Insolvency Department do, how protection from creditors works and what the consequences are.
Key facts
Deadline
Debt Relief Order: eligible debts of up to €25,000 in total, excluding excluded and secured debts (Law 65(I)/2015, definition of eligible debt and section 16). Court-imposed Personal Repayment Plan in respect of a primary residence: market value of the residence up to €350,000 and other assets up to €500,000, among other conditions. A protective order stops enforcement for the period set by the court while the plan is prepared and voted on.
What to do
Make a full list of debts, income and assets. List every creditor, the amount owed, whether the debt is secured (for example a mortgage on your home), the monthly instalment and any arrears. List your net monthly income, essential living expenses for your household and all assets: home, other property, car, savings, shares.
The Law uses the concept of reasonable living expenses, set by the Insolvency Department, to determine how much you can afford to pay. A realistic budget is the basis of any solution.
Talk to your creditors first. Banks and credit acquiring companies in Cyprus must follow the Central Bank's arrears management rules and examine restructuring requests. Ask in writing for a restructuring of your loans, attaching your statement of personal financial information.
If a restructuring is agreed, you may not need an insolvency procedure. If not, or if your debts are too large or numerous, consider the statutory procedures.
Check whether a Debt Relief Order fits. A Debt Relief Order is for debtors whose eligible debts, such as credit card debt, overdrafts or unsecured bank loans, utility and telephone bills, do not exceed €25,000 in total, excluding excluded debts (for example maintenance under a court order) and secured debts. Income and asset limits also apply.
The application is made through the Insolvency Department (Official Receiver). If granted, creditors cannot pursue the eligible debts during the supervision period, after which the remaining eligible debts are discharged.
Consider a Personal Repayment Plan. If your debts are larger or include secured debts such as a mortgage, appoint a licensed insolvency practitioner under the Insolvency Practitioners Law of 2015 (Law 64(I)/2015). The practitioner examines your finances and prepares a proposed plan, usually lasting several years, setting out how much each creditor will receive and on what terms.
The practitioner can apply to the District Court for a protective order. While it is in force, creditors cannot start or continue enforcement, foreclosure or legal proceedings against you for the debts covered.
The creditors' meeting and approval. The plan is submitted to a meeting of creditors, who vote on it according to the majorities laid down in the Law. If approved, the plan binds the creditors concerned and is registered.
If creditors reject a plan that includes your primary residence and certain conditions are met, including that the market value of the residence does not exceed €350,000, your other assets do not exceed €500,000 and your difficulties arose from circumstances beyond your control, the court may approve the plan despite the objection. Creditors can challenge an approved plan only on the grounds provided by the Law.
Comply with the plan. During the plan you must make the agreed payments, inform the practitioner of changes in your income or assets and not take on new significant debts without permission. If your circumstances change significantly, the plan may be varied.
If you fail to comply, the plan may be terminated and creditors regain their rights to enforce. Keep every payment receipt and the practitioner's reports.
Bankruptcy as a last resort. If no other solution is possible, you or a creditor can petition the District Court for a bankruptcy order under the Bankruptcy Law, Cap. 5. Your assets vest in the Official Receiver or a trustee, who sells them and distributes the proceeds; after the statutory period, you can be discharged from remaining debts.
Bankruptcy has serious consequences: restrictions on obtaining credit, on acting as a company director and on certain professions. Take advice before choosing this route.
Know which debts are not discharged. Certain debts are excluded from Debt Relief Orders and are usually not affected by insolvency procedures: maintenance orders under family law, court fines, debts arising from fraud, and some taxes and social insurance contributions. Secured creditors keep their security unless the plan provides otherwise.
Your practitioner should explain from the start which debts will remain after the procedure.
What to watch out for
- Waiting until the bank has started foreclosure before seeking advice; protection is easier to obtain earlier.
- Hiding assets or income from the practitioner or the Insolvency Department; this can lead to refusal, termination and criminal liability.
- Transferring property to relatives before applying; such transfers can be challenged.
- Taking on new debts during the procedure without permission.
- Assuming that maintenance arrears or fines will be written off.
- Using unlicensed advisers instead of a licensed insolvency practitioner.
- Ignoring guarantors and co-borrowers. Your plan does not automatically protect people who guaranteed your loans.
Legal basis
Related court decisions
Frequently asked questions
What is personal insolvency in Cyprus?
A set of legal procedures under Law 65(I)/2015 for individuals who cannot pay their debts as they fall due: the Debt Relief Order for small unsecured debts up to €25,000, and the Personal Repayment Plan prepared with an insolvency practitioner. Bankruptcy under Cap. 5 is a separate, last-resort procedure.
Can I keep my house if I go insolvent in Cyprus?
A Personal Repayment Plan can be designed to keep your primary residence. If creditors reject it, the court may approve it in certain conditions, including that the residence is worth no more than €350,000 and your other assets no more than €500,000.
Who can get a Debt Relief Order?
A debtor whose eligible debts, such as credit cards, overdrafts, unsecured loans and utility bills, total no more than €25,000, excluding excluded and secured debts, and who meets the income and asset limits. The application is made through the Insolvency Department.
Does a protective order stop the bank from selling my house?
Yes, while it is in force. A protective order issued by the court in the Personal Repayment Plan procedure prevents creditors from starting or continuing enforcement, foreclosure or legal proceedings for the debts covered.
Do I need an insolvency practitioner?
For a Personal Repayment Plan, yes. Only a practitioner licensed under Law 64(I)/2015 can prepare the plan and apply for a protective order. For a Debt Relief Order, the application goes through the Insolvency Department.
Which debts cannot be written off?
Maintenance owed under family court orders, fines, debts arising from fraud and certain public debts are generally excluded. Secured creditors keep their security unless the plan provides otherwise. Ask the practitioner which debts will remain.
What are the consequences of bankruptcy in Cyprus?
Your assets are administered by the Official Receiver or a trustee for the benefit of creditors, and you face restrictions on obtaining credit and acting as a company director until discharge. It is usually considered only when a repayment plan is not possible.
Can a creditor force me into bankruptcy?
Yes, a creditor owed a debt above the statutory threshold can petition for a bankruptcy order under Cap. 5 if you fail to pay. Seek advice immediately if you receive a statutory demand or a bankruptcy petition.
How long does a Personal Repayment Plan last?
The duration is set in the plan within the limits of Law 65(I)/2015 and depends on your income and debts; plans usually run for several years. During the plan you must pay the agreed amounts and report changes in your circumstances to the insolvency practitioner.
Will my guarantor still be liable?
A guarantor's liability is a separate obligation. Unless the plan or the creditor releases the guarantor, the creditor may still pursue the guarantor for the guaranteed debt. Guarantors in difficulty may need their own advice or procedure.
How much does an insolvency practitioner cost?
Fees are set within the framework of the Insolvency Practitioners Law and the Insolvency Department's rules and are usually paid in part from the plan. Ask for a written estimate before appointing a practitioner, and check that the practitioner holds a valid licence.
Legal guide – individual how-tos
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