March 11, 2019 Michael Oren 0Comment

How to get out of debts if they are too many?

When a debt is contracted, it is usually done by providing a repayment plan that is consistent with one’s income, so that it is sustainable for the family budget. But what to do if you have too many debts? Debt settlement can help you. Learn the advantages and disadvantages at PushButton.

Concrete case

Let’s start with a specific case: Maria and Clavio, her teacher, the company manager, sign a mortgage for the purchase of the house and a loan for the purchase of a car. For a series of unfavorable circumstances, after a couple of years, they both lose their jobs. What should they do?

First possibility

First possibility

The first suggestion is to contact the bank to look for a solution, bearing in mind the new moratorium on mortgages for the years 2015-2017, as indicated in the 2015 Stability Law, article 1 – paragraph 246, establishes, for some cases expressly expected, the 12-month suspension of the loan. The cases listed by the legislation are:

  • loss of job
  • the death
  • serious injury
  • suspension or reduction of working hours
  • admission to social safety nets such as redundancy funds, mobility or even solidarity contracts, for at least 30 consecutive days.

However, the suspension does not exclude the payment of interest. Until the end of December 2015, it is also possible to apply for access to the Solidarity Fund, the Public Insurance Service Dealer: the body that intervenes to cover the risks of the community that can not be compensated by the normal contractual mechanisms. Maria and Clavio will have to provide the necessary documents to the bank which, after having acquired them, will address the application to Consumer. The suspension mechanism of the debt since last June has been extended to consumer credit: it is possible to suspend the payment of the principal amount and, at the discretion of the institution, also of interest.

Second chance

Another possibility that could be used by Maria and Clavio, if after a year they have not been able to solve their problems, is that given by the ” consumer plan “, since they have the necessary requisites to start the procedure:

  • they are people who have contracted debts for purposes unrelated to their entrepreneurial or professional activity
  • they were in good faith and the debt was not disproportionate to their chances
  • the debt incurred by them can no longer be healed with their assets
  • the causes of insolvency are not related to their direct responsibility: there was no bad faith, nor was it remotely predictable that they would lose their jobs.

The procedure is not free, as the agreement relating to the contents of the “consumer plan” should be drafted by a notary, a lawyer, an accountant or a “crisis settlement body”. The latter subject is envisaged by a ministerial decree of 2014 and includes some bodies, so-called by law, activated by chambers of commerce, by professional associations of lawyers, accountants, notaries, and by social secretariats; another group, which we could define as public, corresponds to the crisis-setting bodies constituted by municipalities, provinces, metropolitan cities, regions, and public universities. The crisis organism will assist Maria and Clavio in the elaboration of the restructuring plan, in the formulation of the proposal, in the collection of the necessary documentation. The plan will then be filed with the Court and it will be up to the judge to decide whether to judge it admissible or not. If approved all the executive procedures, possibly initiated against Maria and Clavio, will be suspended. As an alternative to the “consumer’s plan”, Maria and Clavio could ask for the ” liquidation of assets “, that is, of all their assets, except for those that are impenetrable (the goods that serve the profession, the household and kitchen utensils, the ‘Wedding ring).

Also, in this case, it is necessary the assistance of a “crisis composition body” that will have to compile the list of all creditors, of the sums owed and of all the seizable assets. The request for admissibility, similarly to what happens for the “consumer plan”, will be submitted to the judge.

Third possibility

The third possibility reserved by the law to Maria and Clavio, which can also be used by companies and companies (unlike the other two reserved for natural persons), is a kind of  agreement, an agreement that must be stipulated with at least 60% of creditors and that, like the arrangement, also has effects against those who have not signed the agreement.

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