Understand what an arrears debt is and how to settle it

Understand what an arrears debt is and how to settle it

Table of Contents

Nobody likes to be in debt, however, due to life circumstances (unemployment and unexpected expenses) many citizens experience financial difficulties and get into debt. Therefore, it is always important to know what debt is and its consequences.

One of the main doubts of UK citizens is knowing what is the deadline for repaying the debt and what are the consequences of not paying the amount due. The answer to the first question is yes: there is a deadline for repaying the debt.

However, this does not mean that the debtor you will not experience complications if you do not honor your commitment to companies. The debt prescription is just the removal of the negative name of the consumer from credit protection agencies, such as Serasa SP and Boa Vista.

It may seem simple, but a debt that has expired has several consequences in the life of the citizen. Therefore, in this article we will explain all the details about the prescription of debt. You will learn:

  • What is debt that is forfeited ?;
  • Does the debt cease to exist ?;
  • How old is the name out of SERASA ?;
  • How long does the name get dirty in the bank ?;
  • Can the 20-year debt be collected ?;
  • Is it worth waiting for the prescription of debt?
  • How do I settle the debt that has fallen?

So, come on!

What is forfeiture?

Debt expires is that debt that the citizen has with any commercial or financial institution for more than 5 years. THE active debt therefore, it expires, according to the Consumer Protection Code, this is the maximum period for collection to be carried out, including in court.

Many people believe that the debt will expire after 3 years, however, this is not the understanding of justice. For 5 years, the lender (to whom you owe) can charge the consumer.

Does the debt cease to exist?

No. The debt prescription only means that it cannot be visible to other companies, however, the debt still exists with the creditor. Therefore, the debt can be collected in court after 5 years if the process is initiated before it expires.

How old is the name that comes out of Serasa?

As mentioned in the previous item, the debt expires after 5 years, since according to the understanding of the Consumer Protection Code, this is the time that the creditor has to carry out the collection.

After this period, the citizen's name can no longer appear as negative in all credit protection agencies, including Serasa. This means that when making a query, other companies will not find your pending.

How long does the name get dirty in the bank?

When there is a prescription of the debt, that is, within 5 years, the creditor is obliged to remove the name from the credit protection agencies. Bank debt expires within these same criteria.

The main difference between an indebted debt with financial institutions is that the pendency is recorded in the Central Bank Credit Information Service, available to all companies in the industry.

Thus, when conducting the consultation, these companies may hinder and decrease your chances of obtaining credit, as your score it will be low. This index indicates the level of consumer confidence and indicates the chances of the debtor to honor the debts.

The greater the score citizens, the more likely they are to get real estate or car financing, bank loans or credit cards.

Can the 20-year debt be collected?

Judicially, the debt expires after 5 years, however, if the creditor has filed a lawsuit before this period ends, yes, the 20-year debt can be collected. It doesn't matter if the creditor went to court a day or two years before the deadline.

In fact, after it is in court, the debt no longer has a term to expire.

It is worth remembering that while the lawsuit is in progress, interest will be flowing normally, so if the company wins the case, the consumer will have to bear all these costs.

If the creditor has gone to court after five years, it remains the company's obligation to remove the consumer's name from the credit protection agencies, such as SPC and Serasa.

In addition, even with the debt due, the creditor still has the right to try to reach an agreement with the indebted person through extrajudicial means, such as calls and letters, as long as there is no abuse in the attempted contact.

Is it worth waiting for the debt prescription?

The answer is no. We have already mentioned in the previous items that, despite the debt to expire after 5 years, the consequences for the underpaid consumer are many. Even if your CPF is withdrawn from Serasa after this period, the pending issue still exists with the creditor.

In addition, if the debt is with a financial institution (bank, for example), your debt goes to a national registry that can be consulted by any company in the industry.

Count on a bass score it can also hinder your chances of getting credit, in an emergency, or when it comes to realizing your dream of home ownership, with a loan.

How do I settle the debt that has fallen?

The debt expires after 5 years and, as we discussed earlier, the consequences may not be judicial, but they are enough to disrupt the consumer's financial life. Therefore, paying the pending items is the best way to be followed.

Consumers who wish to pay what they owe to the creditor should contact the company or financial institution and ask for an agreement, either in cash payment or in installments of the debt.

A good tip before going into debt is to carry out financial planning, so you will be sure that you will be able to honor the debts you make. In this article on our blog, we talked a little more about how to save your salary.

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