An individual in Cyprus who cannot pay their debts has three statutory routes. A debt relief order writes off up to €25,000 of unsecured debt for people with almost nothing to their name. A personal repayment plan restructures larger debts over up to five years and is designed to keep the family home where it can. Bankruptcy under the Bankruptcy Law, Cap. 5, is the last resort: it needs unsecured debts above €15,000, hands your property to a trustee, and normally ends in automatic discharge three years after the order.
All three are run through the Department of Insolvency, and the two newer procedures come from the Insolvency of Natural Persons (Personal Repayment Plans and Debt Relief Orders) Law of 2015, Law 65(I)/2015. That law was amended again this year by Law 112(I)/2026, published in the Official Gazette on 8 May 2026, so older guides you find online may quote thresholds that no longer apply.
Which route fits your situation
Each route has an entry test, and in practice the test picks the route for you.
| Debt relief order | Personal repayment plan | Bankruptcy | |
|---|---|---|---|
| Debt covered | Unsecured, up to €25,000 | Secured and unsecured | Unsecured debts over €15,000 to qualify |
| Who runs it | Department of Insolvency | Licensed insolvency practitioner, approved by the court | Official Receiver or a licensed trustee, under the court |
| Assets | Must not exceed €1,000 (with limited exemptions) | Kept where the plan allows, home included | Pass to the trustee, minus exempt items |
| Typical length | Not a payment plan | Up to 60 months, extendable by 12 | Discharge after 3 years if you cooperate |
Debt relief orders: for people with nothing to give
This is the cheapest route, aimed at people with no realistic way to repay. According to the Department of Insolvency, you qualify only if:
- your monthly net disposable income, after reasonable living expenses for the whole household, is no more than €200
- your assets, including any real estate, are worth no more than €1,000, even if a property is mortgaged for more than its value
- you are insolvent and likely to stay that way for a year from the application date
- your usual residence is in the Republic of Cyprus
- you have not been made bankrupt, or were discharged at least five years ago, and no other restructuring plan is in place
Some things are left out of the €1,000 asset count: a vehicle worth up to €4,000, and work tools or equipment up to €6,000 in total. The relief covers unsecured debts only. If you owe more than €25,000, the order can still be made, but you stay liable for the balance above the cap.
The 2026 amendment loosened the definition of "debt" for these purposes to include liquidated sums that have become payable or debts more than 120 days in arrears, and it brought claims based on unfair contract terms (as defined by the consumer protection legislation) inside the scheme.
You cannot use the scheme twice in quick succession. The Department's guidance bars anyone who has had debts discharged by a debt relief order in the previous three years.
Personal repayment plans: restructuring without losing the house
A personal repayment plan is the route for people who have income and assets, including a mortgaged home, but whose debts have got away from them. Its stated aim is to keep the debtor in their main residence where possible while creditors still get something back.
The process runs like this:
- 1You appoint a licensed insolvency practitioner. Under the Insolvency Practitioners Law, Law 64(I)/2015, only a licensed practitioner can do this work; your accountant cannot step in unless they hold a licence.
- 2The practitioner reviews your finances and, if you look eligible, applies to the Department of Insolvency. After its review the Department issues a protection certificate and petitions the court for a protection order.
- 3The protection order lasts 95 days. It can be extended up to twice by up to 40 days each time, and further in special circumstances. While it is in force, creditors are held back from enforcement so the practitioner can put a plan to them.
- 4Creditors vote. A plan backed by creditors holding 75% of the debt by value, and then approved by the court, binds you and all of them.
- 5You make the payments. The plan can run for up to 60 months, with a possible 12-month extension.
If you keep to the plan, you are discharged from the unsecured debts it covers, and from secured debts to the extent the plan says so.
What changed in May 2026
Law 112(I)/2026 applies to applications filed after 8 May 2026, and it shifted the balance towards debtors. Where a plan is imposed on dissenting creditors, the value ceiling for the principal residence rose from €350,000 to €400,000. Security is now valued at forced sale value rather than market value, which usually lowers the secured creditor's claim on the plan. Assets the debtor needs to live or work are expressly protected from disposal.
Two changes matter a lot to families. While a plan is in force, a creditor can no longer start or continue proceedings against a guarantor on the guarantee, which in Cyprus often means a parent or sibling who signed for a housing loan. And the old restrictions on how far a debtor's income must have fallen were abolished: a drop in income is now presumed to be outside the debtor's control unless the creditor proves otherwise.
Bankruptcy under Cap. 5
Bankruptcy is the bluntest of the three. Either a creditor or the debtor can petition the court, but only where total unsecured debts exceed €15,000 and an "act of bankruptcy" has occurred. According to the European e-Justice Portal summary of Cap. 5, the commonest acts are failing to pay a final judgment debt of any amount, filing a declaration that you cannot pay, filing your own petition, or a failed personal repayment plan. The debtor also needs a link to Cyprus: personal presence, habitual residence, or business there.
The Department of Insolvency charges a €500 fee on a petition, and the petition must come with a certificate from the Department confirming that no restructuring under the 2015 law is under way. If you petition yourself, you must also swear an affidavit that you made reasonable efforts to reach a compromise through a personal repayment plan, where your circumstances allowed one. For the creditor's side of the same process, see our guide to debt collection in Cyprus.
What a bankruptcy order does
Once the order is made, the Official Receiver becomes trustee of your property, although creditors can replace the Receiver with a licensed private practitioner at their meeting. Creditors have 35 days from publication of the order in the Official Gazette to lodge proof of their debts. Your property is sold and the proceeds go to preferential debts first, then unsecured creditors pro rata.
You keep a short list of exempt items: business books, tools and equipment up to €6,000, a vehicle up to €3,000 (more if you or a dependant has a disability), necessary household appliances, and education books and equipment.
The restrictions while you remain undischarged are practical ones:
- you cannot act as a company director without the court's permission
- you must tell anyone lending you €650 or more that you are bankrupt
- creditors cannot sue you over provable debts without leave of the court
- you are barred from elected local office, such as mayor, municipal councillor or community leader, unless a court certifies on discharge that the bankruptcy was not caused by your misconduct
Transactions made before the order can be unwound. The e-Justice summary records that gifts or transfers at an undervalue in the three years before bankruptcy can be set aside, and the look-back stretches to ten years where you could not pay your debts without the asset you gave away. Moving the villa into a spouse's name before petitioning does not work, and the 2015 reforms added criminal offences for hiding or fraudulently alienating assets.
Discharge after three years
Discharge is automatic three years after the bankruptcy order, provided you filed your statement of affairs and preliminary report with the trustee at least a year before that date, and you acted in good faith and cooperated fully with the trustee. It releases your provable debts, with the exception of the categories listed in section 27A(8) of Cap. 5. Property you acquire after discharge is yours, though anything that arose during the bankruptcy still belongs to the estate even if it is registered later.
Before you choose
For most people with a mortgage, a repayment plan beats bankruptcy because it can keep the house. For someone renting, with no assets and modest debts, the debt relief order is far cheaper than either. The Department of Insolvency publishes an eligibility tool and debtors' guidebooks on its website, a sensible first stop before paying anyone.
A company's debts belong to the company, and closing a company follows separate rules under Cap. 113. Personal guarantees given to a bank are another matter, and they are often what pulls a director into personal insolvency.
If you live in the UK and hold a Cyprus property on a non-resident mortgage, take advice on where any proceedings belong. Cyprus bankruptcy needs a real connection to the island, and the debt relief order needs you to live here.
Struggling with debts in Cyprus? Compare banking and finance lawyers or search the directory for an advocate who works alongside licensed insolvency practitioners. Thresholds here reflect the law in force in October 2026, including Law 112(I)/2026; confirm your own position with a qualified Cyprus lawyer before you apply.