Falling in default means not being able to take the installments of a loan within the term, according to the conditions agreed by both parties when signing the contract. Due to the current crisis, a large number of people have seen their economic situation change suddenly and, therefore, have not been able to continue paying the loan installments requested before the recession began. This situation has occurred especially in mortgage loans, whose duration is several years.
There are several measures that entities take in case of customer default.
In the first place, there are measures that seek to provide alternatives so that it can take charge of the quotas according to its new economic situation. You can opt for a reunification of debts, a deferral, etc. The facilities that can be had in these cases vary from one entity to another.
Non-payment is not considered a crime, only a fault as long as the only one involved is a private individual and there has been no misuse of money (embezzlement, prevarication, etc.). Therefore, non-payment is not punishable by jail. Only relevant measures are taken, when necessary, for payment to be made at some time. One of these measures may be that an amount of money is deducted from our payroll until the debt is amortized.
Although there have been many seizures of property in recent years, entities prefer a friendly solution rather than resort to judicial proceedings. Always try to get a new agreement in line with the current economic situation before resorting to the courts. The judicial proceedings are usually lengthened and are not comfortable for any of the parties.
Non-payment can be due to several reasons,
The main one being the lack of money but it can also be due to poor money management by the client. For this reason, it is very advisable to estimate whether we can make a payment as agreed before committing ourselves. Avoid falling into default should be one of the priorities as it may involve an even larger outlay of money through additional fees, late payment interest, etc. advertisements
The policies of banks have changed in recent years due to the significant increase in delinquency as a result of job losses and, in general, economic precariousness. Currently, the mechanisms that control non-payment are more rigid and demanding than in the past avoiding the granting of loans when it implies high risk for the entity.
This is an entry on a series of articles related to the generalities and characteristics of loans and credits where we try to bring the user information that we consider of great interest before applying for any of the types of loans that exist in the financial market.