Browse Month: January 2020

Loans for pensioners with minimum pension

Retired loans with a minimum pension? Complete guide to these loans that are not accessible to everyone because the law assumes that every person must have every month, to be able to spend on shopping, bills and everything else, an amount equal to at least the minimum pension, which therefore cannot be used to finance a personal loan. This amount is called a sort of minimum survival amount.

Not all retirees can get funding with their pension, let’s see in this complete guide updated to 2020 what can be done.

What are the minimum pensions?

What are the minimum pensions?

The minimum pension is the minimum economic treatment required by law, which all pensioners must have in order to live, month by month. For 2020 the minimum pension amount is $ 513.01 per month. This amount is the minimum amount considered to be able to live for all pensioners.

It follows that this amount cannot be affected in any way by the repayment of the installments of a personal loan, even if obtained with the assignment of the fifth. Consequently, a loan can only be requested by retirees who can boast a monthly fee in excess of the minimum.

Example of personal loan, because the minimum pension is needed

Let’s take a concrete example of how the minimum pension for personal loans works, in order to better understand the concept.

  • Net monthly pension: $ 1,000
  • Maximum transferable amount: $ 200 (1/5 of the net pension). It is also the maximum monthly payment that can be paid.
  • Residual pension after the payment of the installment: 800 $

This value is higher than the minimum pension, so you can proceed without problems with the fifth assignment.

Here is another example.

  • Net monthly pension: $ 600
  • Theoretically transferable amount: $ 120 (1/5 of the net pension)
  • Residual pension after the payment of the installment: 480 $

This amount ($ 480) is lower than the minimum pension foreseen by law for 2020, therefore the monthly installment is “adjusted” so that the difference between the minimum and the residual is never less than the minimum.

For this reason, the maximum monthly installment that can be paid becomes $ 600 (net) – $ 513.01 (minimum pension) = $ 86.99 (installment that can be paid, at most, in the reimbursement of the transfer of the fifth).

Conclusions and alternative solutions

Conclusions and alternative solutions

As we have seen, the pension defined as “legal minimum” has an important influence on the calculation of a loan and on the repayment procedure.

We understand that Italian law considers the minimum legal pension to be “sacred” and “untouchable”, which therefore can never be affected by any financing or reimbursement.

So, to conclude, loans to pensioners who have the minimum pension are obtainable, but along other paths, such as lifetime loans, which are based on the possession of a property that is given as collateral.

When do they prescribe debts? We tell you

In Spain, according to the civil code, debts tend to prescribe over a period of five years. There are many factors that determine the time of prescription or maturity of a debt incurred with a financial entity.

To be able to know if the acquired bank debt or the money pending payment has come to prescribe it is necessary to make a deeper study of the type of indebtedness that one has. The period really varies from three years to twenty years.

When do they prescribe debts?

When do they prescribe debts?

In Spain, debts tend to prescribe according to the type of indebtedness that was acquired at the time. The number of years that pass for these debts to prescribe range from three to twenty years.

However, there are many ways to declare that a pending obligation came to prescribe:

  • In case of payment: naturally, a paid load is automatically a commitment that no longer exists and, therefore, we can say that prescribed.
  • Prescription of the debt: when a certain time of between 3 and 20 years has passed with the same liability, which is not mortgage, and this has not been paid, it is canceled.
  • By compensation: in this case, the debtor gives a compensation that replaces the money that is owed, therefore, somehow cancels the outstanding balance.
  • Forgiveness: although this happens a few times, the creditor may decide to pay off the debt, even if it has not been so, but for all purposes, it will appear as a settled obligation I prescribed.

It is normal to believe that all commitments are made “until the end of time”, but it is not so. In this article, we tell you.

When do you prescribe a personal loan?

When a loan is requested from a bank, as long as it is not a mortgage, these debts and their interests come to prescribe.

Any non-mortgage bank loan, whether a personal loan or credit card, comes to prescribe after five years. Originally the borrowings generated by the credit card prescribed at fifteen.

Debts acquired between November 7, 2000, and November 7, 2005, by law, continue to be prescribed at 15 years.

However, currently, this statute of limitations has been reduced from 15 to 5 years.

It is important to review all articles associated with bank credit cards, as there are some “small letters” that must be taken into account.

Differences between expiration and prescription of a debt

The words “prescribe” and “expire” are often considered synonymous words with each other, however, they are not, and much less in Law. To understand the difference between a noun and another in a simple way we explain it through an example.

It is known that dehydrated foods have a long lifespan, however, it is mandatory to put a day of expiration, which we can consider as its date to prescribe, but not expiration. That is, this date is decided for consumer safety, as is the prescription of debt, however, these foods never expire.

On the other hand, milk and other foods expire, that is, they expire. The date that appears written on its packaging determines the moment in which the product in question, for health reasons, in this case, can no longer be consumed. In personal debts, the expiration comes when the right to collect the debt can no longer be exercised and, therefore, the law that could regulate this debt ceases to be valid. On the contrary, the prescription of the load is given when it has been a long time since it was contracted and although it remains in force and will never disappear, it has been prescribed for the passage of sufficient time.

Most common deadlines for prescribing debts in Spain

Most common deadlines for prescribing debts in Spain

Initially, it was explained that the most common time used for a debt to be prescribed is five years, but this changes according to the type of cargo acquired:

  • Mortgage loan: depending on the conditions in which the loan or credit with the bank is requested, it can vary from fifteen to twenty years until its prescription.
  • Non-mortgage bank loans: these include commercial debts acquired with credit cards and prescribe after five years.
  • Social Security and Finance: these obligations have a term of four years to prescribe.
  • Other debts: those related to alimony, general services or rent payment, among others, prescribed at 5 years.