A mortgage is a 20- to 30-year contract, and life rarely goes to plan for that long. A job loss, illness, a separation or simply a higher instalment on a variable rate — and suddenly the monthly payment is hard to make. The good news is that there are many steps between "I can't make this payment" and "the bank is selling my home", and at most of them you still have choices. The bad news is that the later you act, the fewer those choices become.
Your strongest position is before the first missed instalment. At that point you are a performing customer with a temporary problem, not a borrower "in default". Call or visit the branch, explain what has happened and how long you expect it to last, and ask for the bank's options in writing.
Bring with you:
The bank is assessing risk. A customer who comes early with a clear plan is a far easier case than one who has not answered the phone for three months.
Since 20 June 2025 Bulgaria's Consumer Real Estate Credit Act (ЗКНИП) has contained explicit rules on handling arrears (Art. 46, amended by the Credit Servicers and Credit Purchasers Act, State Gazette No. 50/2025, which transposed the EU credit servicers directive):
The law lists the minimum set of such measures: full or partial refinancing, extending the term, changing the type of loan, rescheduling instalments for a period, changing the interest rate, a payment holiday, partial payments, currency conversion, partial debt forgiveness and consolidation.
One important qualification: "where appropriate" means you have no automatic right to any particular measure — the bank decides. But it must look for a solution before going to court. If it refuses without explanation, ask for its reasons in writing. Compliance with these rules is supervised by the Consumer Protection Commission (Art. 66 ЗКНИП).
When terms are changed, the bank must give you a new repayment schedule on paper or another durable medium, describing the changes and how you can complain (Art. 28a ЗКНИП).
| Situation | Measure to ask about |
|---|---|
| Temporary drop in income (up to a year) | Payment holiday — interest only, or deferred instalments for a few months |
| Permanently lower income | Longer term — lower instalment, but more interest overall |
| Several loans with high payments | Consolidation or refinancing |
| An unexpected one-off shortfall | Rescheduling the overdue part |
Every measure has a cost: a longer term and a payment holiday almost always increase the total interest you pay. Work it out before you sign the annex. If another bank offers better terms, look at refinancing too — but that is realistic only while your loan is still performing.
Check your insurance as well. If the loan carries life cover or a policy against job loss or incapacity, read what it covers — it sometimes takes over the instalments for a set period.
Default interest is capped. The bank may charge compensation only on the overdue amount and only for the period of delay, and it may not exceed the statutory interest rate (Art. 43(1)–(2) ЗКНИП). If you see penalty interest on the whole balance, or fees that look like a sanction, ask for a breakdown.
The bank cannot refuse a partial payment (Art. 43(3)). If you can pay half an instalment, pay it. It reduces the arrears and shows good faith.
Every missed payment is reported to the Central Credit Register and stays visible for five years — more on that in our guide to the CCR and your mortgage.
After prolonged non-payment, the contract usually allows the bank to declare the entire outstanding balance due early. Bulgarian case law is clear that this requires a declaration that has actually reached you before the bank files its application in court (Interpretative Decision No. 4/2013 of the Supreme Court of Cassation's civil and commercial colleges, item 18). If the bank has not done this, it can obtain through the courts only the instalments already due, not the whole loan (Interpretative Decision No. 8/2017).
The practical lesson: do not ignore letters from the bank, and keep every notice together with the date you received it.
To collect, the bank normally asks the district court for an order for immediate enforcement under Art. 417 of the Civil Procedure Code (ГПК) — based on an extract from its accounting books, to which it must attach the contract, annexes and general terms, or based on the mortgage deed. If the claim rests on an unfair term in a consumer contract, the court must refuse it (Art. 411(2)(3) ГПК).
Once the bailiff serves the order on you, you have one month to file an objection (Art. 414(2) ГПК). This deadline cannot be extended. Within the same month you can also appeal the immediate-enforcement ruling (Art. 419 ГПК).
An objection on its own does not stop enforcement. The court can suspend it if you provide security — for a consumer, up to one third of the claim — or without security if you produce written evidence that the debt is not owed, that it rests on an unfair term, or that the amount was miscalculated (Art. 420 ГПК). This is the moment to see a lawyer — not after the sale.
Many people believe a bailiff cannot sell their only home. That protection exists (Art. 444(7) ГПК), but it does not apply against the bank that holds the mortgage (Art. 445(1) ГПК). The mortgage lender is paid first from the price of the property (Art. 173 of the Obligations and Contracts Act, ЗЗД).
Nor is the bank required to start with the mortgaged property — it can also go after wages, accounts or other assets (Art. 442 ГПК). If the sale does not cover the whole debt, the remainder generally stays owed, because all of a debtor's assets stand as security for creditors (Art. 133 ЗЗД).
There is one exception worth checking: ЗКНИП requires the bank to offer you a choice between a contract under which it is satisfied in full and finally up to the value of the collateral, and one with full personal liability (Art. 24(2)). Look at which option you signed.
At a public sale, bidding starts at 80% of the property's valuation, and not below its tax valuation (Art. 485(4)–(5) ГПК). If there is no buyer, the second sale starts at 90% of the first starting price — around 72% of the valuation (Art. 494(2)). Bailiff's fees and legal costs come on top.
If you sell yourself, at market price and with the bank's consent, you usually get more, clear the debt and avoid those costs. How the bank gets paid and the mortgage is cancelled on a sale is explained in our guide to selling a property with a mortgage still on it. Until the sale itself, the property stays in your possession (Art. 486(1) ГПК), so there is time — but it runs out quickly.
Bulgaria's Personal Insolvency Act has been in force since 2025, and its register went live in August 2026. The procedure, however, is not a way to keep a mortgaged home or to wipe out the mortgage — the bank's right over the property remains. If you have many debts, talk to a lawyer before filing.
If you are weighing up restructuring, refinancing or selling in time, call us or come into the office. We will run the numbers with you and tell you what price your home can realistically achieve.
This is general information, not legal or financial advice. Verified as of November 2026 against ЗКНИП (as amended by State Gazette No. 50/2025) and the Civil Procedure Code. If you have been served with a payment order, see a lawyer immediately.
