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The present paper discusses the accumulation of Non-Performing Loans (NPLs) on banks’ balance sheets, particularly after the recent financial crisis and recurrent recessions, which adversely affects banks’ performance and intensifies systemic risk. For this reason, bank-specific measures and systemic-wide policy initiatives have been proposed and followed, with the objective of effectively managing existing high stocks of NPLs and preventing their future excessive build-up. Particularly in Europe, various policy actions have been adopted in an effort to effectively address this legacy of the crisis. Such legislative initiatives are complementary and form a comprehensive package, aimed at enhancing the Banking and Capital Markets Union, thus promoting the establishment of an integrated Economic and Monetary Union. Within the Council’s Action Plan and the Commission’s NPL legislative package, there has been proposed a Directive on a common distinct accelerated extrajudicial collateral enforcement mechanism, which enables credit institutions to efficiently recover value from the collateral pledged in secured business loans out-of-court. The contractual agreement on the voluntary use of this debt recovery mechanism shall constitute a directly enforceable title and collateral enforcement shall be expedited, under specific formalistic conditions. However, certain legal aspects of the proposed enforcement procedure are being questioned. The analysis of the extrajudicial enforcement framework highlights its deficiencies and the dangers it entails, particularly with respect to its potentially detrimental effects on debtors’ interests. Since the proposed mechanism appears greatly disruptive to the existing ‘traditional’ collateral enforcement procedures, its consistency with national pre-insolvency and insolvency proceedings and the Financial Collateral Directive is being discussed in this paper. Concluding remarks summarise the author’s opinion on the future of collateral enforcement of NPLs in Europe.