Financial debts are a big concern for most of the citizens of the world. But there is a point in time when even these expire. Let's examine together when prescribes a debt.
When does a debt prescribe? The question of the long-standing debtor
In the modern social landscape, we even find it somewhat naive a priori to ask When does a debt prescribe? Our existence is determined to such an extent by the money that we owe to various instances throughout our lives that it seems to us at first sight a delusion that something can take this weight off our shoulders just by waiting a while.
However, although there are other factors to consider, this is exactly the case in many cases and every citizen should be aware of the expiration times of their monetary obligations to know how to get rid of them without too much bureaucratic pain.
The prescription of a debt is well established in most of the foundational legislative documents of countries around the world. For example, article 1961 of the Spanish Civil Code states that the actions prescribe for the mere period of time set by law.
From which it follows that the debt actions remain active only as long as they remain within a certain period determined by the legal text. The articles that follow this article 1961 specify each case of debt that may exist with the term assigned for each one. In this way, each party is in a position to know how the debt associated with its specific scope is defined.
However, it is not only time that must be considered when evaluating the prescription of a debt. The specific actions of the creditor and the debtor with respect to the existing debt can completely modify the established terms, forcing other considerations of time. We will see it next.
If you have a special interest in debt scenarios, particularly everything related to ways to seek debt resolution, you may find it useful to visit this other article on our website dedicated to the details and tips to know. how to negotiate a debt.
It may be important to know both the expiration periods indicated here and how to find solutions together with the creditor in a negotiation. Follow the link! If you want to know more about when prescribes a debt, continue reading this article.
Basic conditions to know When prescribes a debt correctly?
As we said before, the actions of creditor and debtor based on the current debt that relates them can decisively alter the terms set by law. Therefore, it may be useful to examine these factors first before evaluating the lapses for each debt format.
The first factor is that there has not been a formal demand by the creditor for the debt to be paid throughout this period of time. This requirement can be given according to the judicial process, in courts specialized in the matter, or extrajudicially, by direct communication by different means with the debtor or by notarial requirement.
If the request described occurs, the creditor is effectively stopping the course of time that would take the debt to prescription, since it is making it clear that the debt is still alive. Otherwise, if you do not present any demand within the term established by law for your case, this would mean that time would continue to run against you until the full expiration of the debt.
The second necessary factor is that the debtor has not acknowledged the existence of the debt. This acknowledgment may be given tacitly in any of the communications with the creditor that the creditor may present as evidence or explicitly in the same communications or in a formal court setting.
The logic is the same as in the case of the creditor's demand actions: if the debtor assumes that there is a debt that must be paid, the statute of limitations cannot continue to run, the obligation remains in force. On the contrary, if the debtor ignores it and the creditor does not demand payment, it can be considered that the debt is on its way to expiration with the fulfillment of the determined term. But these terms are different for each type of debt. We then see several of these periods as established by law.
Debt prescription in the case of a credit card
We begin with the case of credit cards, probably the most common type of debt for the citizen of any city and the obligation that can be fatally extended over time due to its deceptive simplicity and interest rates. Therefore, it is also one of the debts in which there may be more desire for expiration by the debtor.
The minimum term indicated by law, in article 1964.2 of the Civil Code, is five years for the prescription of the debt. These five years begin to count from the moment in which it is possible to demand compliance with the payment, that is, from the first scenario of debt with respect to credit.
As expected, it is difficult for the bank not to produce any demand for payment in all this time. The expected income from the bank's point of view when it comes to credit cards is necessarily based on constant debt management.
However, there are cases in which it can occur in this way, due to merger or sale processes of the entity that lead to the loss of records or due to the loss of trace of the individual debtor in question.
Prescription of a debt in the case of a fine
The fines also prescribe, although it is necessary to outline certain nuances between different concepts. For example, one thing is the expiration of the infraction, because the appropriate entities to impose it did not do it in the precise period of time, and another thing is the prescription of the fine itself, the economic sanction that it is necessary to pay to get rid of the obligation for the violation.
If we talk about the first, the expiration of the infraction, we need to resort to the traffic law. In this legal text we are told about different prescription periods depending on how serious the infraction is, within a range that goes from the slight, through the serious, to the very serious. The mildest case is assigned a period of three months to expire, provided that the sanction has never been notified to the individual. The second case, serious, is assigned a double period of six months.
And in the case of very serious infractions, six months must also elapse before it is annulled. In the second case, the moment in which the fine prescribes, it is considered that when the four years have elapsed, it will no longer be possible to claim payment for the sanction.
Prescription of a debt in the case of a rental
Article 166 of the Civil Code deals specifically with rentals under the real estate lease section. The law simply states that the term of five years is the minimum period to consider that the payment owed on rent has expired. After these five years, it will not be necessary for the debtor to pay the payment in arrears.
Of course, as in the case of credit cards and banks, it is rare that a period of five years of rent is fulfilled without the landlord claiming payment and starting legal claims. It would have to be a case of extreme distance and negligence regarding their possessions, which ends up triggering a lease debt prescription.
Prescription of a debt in the case of a mortgage
¿When does a debt prescribe? if we talk about a mortgage? This section is quite reviewed by thousands of debtors everywhere, since the consequences of having a default within a mortgage are usually quite unpleasant and vast.
The repossession and auction of the home is the least that can happen as a result of a debt not assumed and the situation does not usually stop there, since many times the entire value of the house does not completely cover the debt with the bank. Then they will have to continue executing deposits to finish paying off the mortgage. It is an expensive process that can take years.
According to article 1964 of the Civil Code, mortgages expire after twenty years from the first moment of non-payment. But the bank, as can be assumed, will not normally wait more than three months to execute a legal claim and collect both the amount owed and the substantial interest accrued on the debt.
The twenty years then function as a mark in most cases symbolic, but functional for some few exceptions of extreme banking irregularity.
Prescription of a debt in the case of Social Security
The Social Security format establishes a limit for your debts related to the payment of contributions: four years from the moment in which the non-payment could be claimed. Once this period has elapsed, the obligation to pay the fees can be considered nullified, as well as the possibility of imposing sanctions on the individual by the institution.
But there is a detail that must be considered. Not all payments that may be due to Social Security have to do with basic quota obligations. There are other sections, such as the payment of specific benefits, self-employment payments or different complementary payments from the public body, which will have their own payment, debt and prescription periods.
Therefore, it is necessary to be extremely aware of these internal variations, which can be specified directly in the corresponding offices.
As in the case of mortgage or credit card debts with banks, it is quite difficult for Social Security not to formally require a payment before the expiration date is four years. There would have to be quite rare cases for the term to be fully met without interruptions due to legal demands.
Prescription of a debt in the case of defaults before the Treasury
There is not much to say in this case, except that, as in the Social Security scenario, the General Tax Law generally imposes four years for the prescription of a debt. The Treasury administration will have this period of four years to present a claim to the citizen for non-payment, if not, the debt can be considered cancelled. It is necessary to warn, as with the banking entities or the Social Security, that the Treasury is particularly fierce and punctual in its claims, for which little can be expected most of the time when letting this four-year period elapse.
Prescription of debts in the case of domestic services
Article 1967 of the Civil Code establishes a period of three years for the prescription of the debt related to the payment of domestic services. These services include electricity, telephone, gas or water, the basic services for the proper functioning of the home. As is well known, these are usually organized on the basis of annual or monthly payments, but in any case the term of three years for the cancellation of the debt is maintained.
Of course, as in the other cases mentioned, receiving notification of debt from the companies responsible for providing the service automatically interrupts the three-year period. But in this area in particular, especially if we talk about electricity or Internet connection by ADSL, the prescriptions of debts with the fulfillment of the term of three years are the order of the day.
The companies associated with these services have long since resigned themselves to a certain level of perennial indebtedness by a percentage of users, pragmatically inserting these red numbers into their balance sheets.
Prescription of a debt in the case of commercial operations
This type of debt corresponds to entire companies rather than to individuals, as was the case in the previous examples. These are debts contracted between companies during joint movements in common projects. The term for the prescription of these debts between legal entities is usually located in the fifteen-year period. After these fifteen years, this debt relationship between companies will be severed.
Perhaps surprisingly, compliance with this term with subsequent prescription is quite common in this area, particularly if the companies are small and the debts are also small. It would have to be a commercial operation of global magnitude with large corporations to ensure that there is a formal claim before the deadline, stopping the annulment clock.
Prescription of a debt in the case of municipal obligations
When does a debt prescribe? municipal, it usually refers to tax payments managed by the City Council of your locality. Although municipal tax payments are many and varied, with numerous acronyms, expiration dates and names, the two most named by the average citizen and the most common are the IC (Circulation Tax) and the IBI (Real Estate Tax). ), quite self-explanatory in their denominations: payments on vehicular movement and personal housing.
In both cases, the term to cover to reach the prescription of the debt is four years. These four years are counted from the moment the payment period ends, that is, from the point at which the last contribution would have been deposited had it been made.
Which means that the institution of the City Council has a full space of four years to claim the non-payment coverage with all the interests that it has accumulated over these years. It should be remembered that in the case of the Circulation Tax, the owners of the vehicles that are no longer active do not have to pay these taxes before the municipality.
As in other areas that we have explored, it can be said that everything related to tax payments is usually treated by the City Council offices with great interest, given the high level of sanctions to which they are exposed through some potential omission. Therefore, it is difficult to wait for a period of four years to pass without hearing from them a demand for compliance with the payment.
With this, a large part of the periods necessary in each case for the prescription of a debt have been covered. In the following video you can see a brief exposition about the prescription of debts within the legality of Spanish territory. So far our article on when prescribes a debt in the different financial areas of the country. See you soon and good luck in your payments, procedures and studies.