How to carry out an effective debt reunification

Many families suffer the consequences of not being able to meet debts.

12 September 2022 Monday 01:49
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How to carry out an effective debt reunification

Many families suffer the consequences of not being able to meet debts. The reasons can be various, such as the loss of employment of one of the members of the family unit or the failure of the business that was the family's livelihood.

Before reaching the default of the loans, and the negative consequences that this entails – evictions and seizures among others – there are some prior mechanisms that can avoid an unpleasant outcome for the debtor. One of these alternatives is found in the reunification of debts in a single loan to lighten the monthly payment.

What this reunification of debts allows is to group all the loans, mortgages and credits that are contracted into one. In this way, you would only have to pay one installment per month, which will be less than the sum of all the individual installments. It should also be noted that in many cases it may be more interesting to take advantage of the Second Chance Law (LSO), since this mechanism allows debts to be completely canceled.

The truth is that it is not a particularly complicated process. That is, neither too many requirements nor too many previous steps are necessary. But, it is necessary to follow some guidelines and meet certain requirements for the aforementioned reunification of debts to be granted.

To do this, the first step is for an expert mediator to study the case, since it is something very personalized. This expert will analyze all the debts and interests that are being paid, as well as the remaining terms of each one of the loans that you have.

If the process seems viable, then this expert mediator will go on to negotiate the new payment conditions with the different banking entities and present the different offers received by the debtor.

Once the debtor studies the offers made by the banking entities consulted, they move on to the next step. This consists of canceling all loans and mortgages to create a new mortgage with the new conditions previously agreed. In this new mortgage, the total of the debts will be added and a new interest rate will be applied, as well as a new repayment period, which is generally longer in order to reduce the monthly payment.

In order to request this reunification, a series of requirements must be met, which are not many or very demanding. The first point that should be known, more than a requirement, is that all debts must be grouped into one: no loan can be left out of this process.

While the second, and more important, has to do with the amount of the new mortgage. In the Spanish system it is established that the new mortgage cannot exceed 80% of the value of the mortgaged asset. That is, if the value of the house and that of the vehicle that is reunited is a total of 200,000 euros, the new mortgage could not exceed 180,000 euros. Thus, the total debt that we have to be reunited cannot exceed that amount.

In addition to that, the banking entities also request that the debtor have a stable and demonstrable monthly income, such as a payroll or a quarterly tax return. Finally, you cannot be part of the list of defaulters either.

Finally, in the fine print of the reunification of debts, the additional cost that may be incurred due to the early cancellation of other loans, which will entail a penalty for non-compliance, also stands out. In the same way, a new opening commission will also be paid for that new mortgage and the payment itself to the mediator who has managed to execute the reunification of debts.



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