Posts Tagged ‘debt’
Choose between providing personal or real guarantees to support a mortgage can avoid surprises when to sell a property.
During the last decade has seen a boom in the sale of housing. The mortgage loan has been, in most cases, the instrument used for financing the acquisition of a property and, in many situations, buyers need a financial support guaranteeing payment of all and each of the shares of mortgage credit.
The figure of the guarantor becomes very important and it became almost imperative for young people, workers with small payrolls, mortgage applicants in excess of 80% of the valuation of the floor or people without a steady job. Many of those who, in turn, signed as guarantors of their relatives or friends may now wonder whether to sell their property or whether, on the contrary, their status as guarantors of a loan of not holding them from freely available of their heritage. The choice between providing personal or real guarantees to support a mortgage may be the key to being able to sell property.
Personal guarantee
Often the figure is often confused with that of guarantor “no debtor mortgagee, so it is important to differentiate the two terms and learn what each means before making a decision to support a mortgage.
The guarantor meets all present and future heritage of debt owed by the holder of the mortgage. That is, personally guarantees that the borrower will meet the payment of contributions, but he does a particular good. It is not uncommon to hear conversations in which ensures that parents have supported their son “to the floor,” but these claims are not entirely correct, which I support with all its assets: its payroll, your checking account, your home. In the event that the owner does not pay the bills, the bank can go directly against the assets of the guarantor.
But not having a specific asset that has served as a guarantee of payment, the guarantor may freely sell its assets and dispose of it in a way it deems most appropriate, it will continue to respond to the new goods. So if you want to sell their home can do so freely, as there is no load on it specifically. That yes, the guarantor’s reduced ability to borrow in the future so if you need a consumer credit or mortgage will not be so easy to get except to respond to your estate before any debts of a third.
If the future guarantor, before backing the borrower, provided that at one point may have to sell your house to buy a new one, by geographical mobility needs or any other reason, it is best to choose the option to use the personal guarantee, because with it has more leeway when it comes to managing their assets.
Collateral
The situation is quite different when the guarantee is used to support the purchase of another house is actually consists of tangible assets and not personal. In this case, the guarantor provides the security for the mortgage payment a specific property and its liability is exhausted with her. It endangers all present and future wealth but only a specific asset such as a building. It is one of the options used when the guarantor does not want to risk all their properties, preferring to have limited liability.
With this kind of guarantee the following possibilities arise:
- That the property used to secure the payment of the mortgage owned by the borrower, ie the person who requests and receives the money to purchase a new home.
- That person uses your home to secure payment of fees by a third party. The latter is the case the mortgagee is not liable, the person without holding the credit puts his own property as collateral for the applicant being granted a mortgage. If given the fact that the borrower does not pay dues on time or fails to definitely pay the bills, the debtor does not respond with mortgagee your home and to the limit has been established. For example, if the bank grants a mortgage to a couple for 80% of the value of an apartment and you need is a hundred percent, parents, other relatives or friends, are a mortgage for 20% value on a property, so that their liability is exhausted by this percentage if the owner does not pay. Thus, only responsible to the extent that the property is mortgaged.
- To secure a debt with a particular property, in this case with a house, the property must be registered in the Land Registry in the name of the person who will use the apartment as collateral. Usually it should be the sole owner or agree with the other owners to put the house up as collateral for payment of a mortgage. Banks are also asking that the property is free of other charges for housing may be used as collateral. Once the guarantor has a mortgage on your property, this charge is reflected in the property registry. As the guarantor of future borrowing capacity is reduced.
- What happens then when the mortgagee debtor not want to sell the property? Legally you can, but it weighs on an obligation and if someone wanted to purchase property you would charge included. Since these data appear in the Property Registry, it is very difficult for the buyer agrees to take shelter in these conditions, so that it is customary to call for debt cancellation. If more and more difficult to sell a home, when it weighs a mortgage on the operation may become impossible.
The only way you can stop the guarantee would be signing a new contract on the credit guarantor to what legally is called “covenant amendment of recognition of debt and restructuring” between the financial institution and the debtor, where specific stop being your bond and in this case we get another, or else is considered a new security, this being such a mortgage, a lien on a chattel and so on.
The problem is that if that person has not paid off, and every day he has more financial institution that you will want to pay the piper of the debtor, and therefore consider it very unlikely to want to sign the restructuring, although nothing lose to try. The possibility of not being endorsed is entirely possible. “As the contract was made may cease to be endorsed by the same procedure.
But not so easy to stop being guarantor for the three parties, ie creditor, principal debtor and guarantor must agree. At the same time and the fulfillment of this condition, you must submit another person, with the acceptance of credit that meets the underwriting function, otherwise any changes will lapse. Another way to stop being guarantor is by prescription. This is submitted after the deadline of one year maturity of the respective letter. If by that time the creditor has not filed suit to collect the debt, perfect the guarantor may request the prescription of the debt. However, this must be specifically requested the court, since judges do not decreed by trade.
The financial commitments are met with banks regardless of the situations we have after the signing. From the outset we should make a proposal to the bank of a change of guarantor, that is solvent and that the bank accept the change without more, is not easy, because the policy is signed before a notary with some premises, on terms and within responsible would have to change all this because of lack always incur the bank agrees to accept because the transaction based on the technical feasibility of the conditions originating in raised, your property and your spouse (if any). You can talk to the bank and your legal representative to see what solutions you can find.
A delinquent debt records, known as automated data files used to reflect delinquencies in payments of both individuals and corporations. This is done so that lenders can learn and ponder the situation of a potential customer requesting funding. The lists of defaulters, given its negative consequences for those who are included therein, have a duty to be scrupulously accurate and transparent and allow the defaulting their rehabilitation in the market.
How do I enter a list of defaulters?
For a person or company you can be placed on a register of this kind should provide the following circumstances:
- That there is a certain debt, callable due and unpaid results.
- You have been asked to pay and this will not occur.
- There must be documentary evidence that contradicts the two previous requirements.
You can only register on a list of delinquent persons or entities possessing defaults on their backs in the past six years. In any case, can be entered in the file to a citizen from the fourth month of default, counting from the maturity of the obligation breached or the particular time limit if the same periodic compliance. The default by a person may only be registered in the default file for a maximum period of six years, which is counted from the inclusion of data in the register and in any case after the fourth month from the expiration of the obligation. The manager must notify the affected file inclusion therein.
How to get out of a record collectors?
First, the rights and the reasons why you may include in one. In this sense it must meet the following requirements:
- That there is a certain debt, due and payable, which has resulted unpaid.
- You have been unsuccessfully requested payment.
- That there is no documentary evidence that apparently contradicts the previous requirements.
If not found in these circumstances and appear to have the problem, action is needed:
1. The individual must be notified of their registration with a delinquent registration within 30 days by the holder.
2. If the data were incorrect, we must request cancellation or amendment within 10 days.
3. The creditor has 7 days to submit documentary evidence to contradict the previous point.
4. To unsubscribe you must provide documentation proving the absence of debt along with copy of ID card. The owner of the list must delete the data in the next 10 days.
5. If no response should be directed to apply to the Spanish Agency of Data Protection provided a copy of the paperwork and low application studied.
6. If you have been harmed by a breach of these rules of data protection shall be entitled to receive compensation after filing an application before the ordinary courts, and must demonstrate and quantify the damage suffered by the side that has the process.
7. If a file of public ownership should complain about the system of government. The file owner must notify the person his inclusion therein within 30 days. Otherwise he is guilty of serious misconduct that can notify the Spanish Agency of Data Protection (AEDP). This is because the debtor is entitled to know their data and to claim your change or cancellation if they are not correct.
The only way out of the files of delinquent debt is meeting, showing that this does not exist, once it has completed the maximum legal period of stay (established in six years) … One problem is that it is the creditor who is obliged to report the cancellation of the debt within a week. Thereafter the applicant must prove the absence of debt together with a copy of the ID of the person concerned. The owner of the file must answer on the Elimination of their data in the next ten days. If you missed the deadline remains the best response is to file a claim in the AEPD.
One of the problems of being in one of these files is that some keep their customer data to “zero balance” status or “paid”. That is, the client remains in the file along with the name of the former creditor. It is a way to reflect that once that person was not solvent. However, this is not legal, it is not possible to keep adverse information on the debtor having been made and a reason to claim compensation.
How do banks or banks in case of a default?
Financial institutions are treated differently defaults on debts, but with the same general method of action:
- During the first 20 days of default, entities are in contact with the debtor to inform him of the debt, if it was an oversight of it.
- If the default continues, the body sends notices more “convincing” in which often specify the default interest and fees set out in the loan contract, which range between 5% and 10%.
- After three months of unpaid institutions intensify their actions in order to secure payment of the debt or, alternatively, to negotiate a new payment method to suit customer needs.
- When six months have passed and no agreement on the new form of payment or default persists, the entities come to litigation with the filing of a lawsuit.
What are the consequences of an unpaid debt?
Once financial institutions or those affected by debt have submitted a claim for payment, you move to the embargo on housing or property to which the defaulter may respond to non-payment if it is accepted.
From this moment, the defaulter has the opportunity to submit a payment agreement which shall include court costs, which can prevent the auction of his possessions.
If no agreement is reached occurs auction as the bank or the creditor will obtain payment of the debt, including interest, fees, court costs and other expenses.
What are the most important records of defaulting?
Whether you’re home buyer, seller and if you’re interested in knowing the information about the major defaulters lists used in Europe. Of the 130 largest companies and organizations that develop property records and credit defaults are:
- Registration Approvals default (RAI)
- National Association of Financial Institutions Credit (ASNEF-EQUIFAX)
- Technical Credit (SEIDO)
- Interbank Cooperation Center (ICC)
- Dun and Bradstreet
- Experian Credit Bureau