Dation in payment is a method that you can use to pay outstanding debts that you have, it consists of handing over a movable or immovable property to complete the payment. This process happens when you and the creditor reach an agreement to compensate the missing amount of the debt.
What is needed to qualify for the dation in payment?
In order for you to use the dation in payment method, you have to comply with the following:
1. In order to finalize the payment commitment, it is necessary to deliver an asset or perform a service other than the one originally contracted.
2. The debtor and the creditor have to agree on this way of paying the obligation they had between them.
3. The creditor has to express acceptance of it, because he has no obligation to accept it, as established 1166 of the Civil Code.
What is the mortgage payment dation?
The possibility of surrendering the house and being without mortgage debt is available with the application of the Second Chance Law. This law allows freelancers and individuals meeting certain conditions to get rid of all debts.
Dation in payment in a mortgage happens when the debtor cannot pay his installments. Then he proceeds to deliver the house to the banking institution and in this way liquidates the debt. Using this method, the delivery of the house will be enough to pay off the mortgage loan.
Conditions for requesting the dation in payment
Dation in payment is mandatory only when there is a rule that establishes it, but there are certain conditions in which one is entitled to this figure. Among them are the following situations:
-When the debtor is in a situation of social exclusion, he will have the right to the dation in payment. Because family members do not have income that allows them to pay debts.
- The dation in payment will also be a right for people who in the last 4 years have gone through a significant change in their economic situation.
- When the monthly mortgage payment exceeds the family's monthly income by 50%.
- The home must be for the exclusive use of the family group formed by the spouses and children. It is mandatory that none of the members of the family group have another house.
The debt must be backed by a mortgage on the house of habitual use, in addition it must not have other charges.
Advantages of the dation in payment in the mortgage debt
The main advantage of dation in payment is that if you cannot pay the mortgage with this procedure, you can avoid foreclosure.
When you give up the house you do not have to pay default interest or be involved in a judicial seizure procedure.
The banking entity also benefits by saving the costs of the judicial procedure.
Financial institutions are not obliged to give the possibility of dation in payment to their clients.
When the procedure for the dation in payment begins, the monthly installments of the mortgage debt are stopped. This will remain so until the process is finished giving the debtor the opportunity to lead a more peaceful life.
While the process for the dation in payment is being carried out, the banking institution cannot initiate legal actions against the debtor. So all your assets and income will be protected for the duration of the process. If you find yourself in the situation of not being able to pay your mortgage and you want to opt for this procedure, we recommend that you seek the advice of a lawyer specialized in the subject.