A company may choose to make a sale of judgement debt to a third party company, or to a third party when it has not received payment on a debt, so that one of them will be in charge of collection.
This is possible only when the parties involved, the debtor, the buyer and the creditor, agree and are able to reach an agreement.
A&M Canary Realtors is a real estate agency specialising in property sales and rentals, as well as property management and administration for owners wishing to sell or rent their property.
Selling of judgement debts in Spain and how it works
A debt is judicialised when a legal action is initiated by Law because of the debt of payment of money, with the aim of recovering the capital. Debts are judicialised when the institution responsible for granting the loan goes to law to sue the counterparty for non-payment. This is followed by a judicial process in which it is determined whether or not the default occurred and whether or not the collateral or guarantee of the loan must be liquidated.
When talking about the sale of a debt, it is understood as the transfer of the debt to a specialised company, providing liquidity to the original creditors, who obtain a part of it without having to resort to collection processes that can mean more costs. In order to sell a judgement debt, the creditor, the buyer and the debtor must all agree. When the parties involved agree to the sale, the lawsuit ends and the recovery of the money proceeds, at which point payment is also negotiated.
Benefits for companies of buying debt
Companies that buy the debt after the purchase process is completed also gain benefits. The main advantage is that, if good results are achieved, the company can make a financial return on the debt amount.
Debt purchase is also an investment for the acquiring entity, as they are familiar with and prepared for debt repayment claims. For this reason, the companies have specialists in legal, economic and other matters, in addition to having the necessary tools to obtain positive results. So, for her, it is an investment with a high probability of success.
Currently, the sale of legalised debts is a common and legal practice in Spain. The vast majority of banking contracts, as well as credit contracts, have an agreement between the entity and the client, which allows the creditor to sell the debt without the need to request the debtor’s authorisation.
The assignment of credit modifies its ownership, the obligation remains in force and the new creditor acquires the guarantees held by the previous creditor.
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