Default

Recently, in consideration of the economic crisis, a guarantee fund has been set up providing that under loan agreements entered into for the purchase of a first home the borrower may suspend payment of instalments for a specified period of time under certain conditions, e.g. regularity of previous payments, loss of employment, etc.

Repeated delays or non-payment of instalments can lead to the loss of the right to extension or cancellation of the contract for default.

When it is not a case of a simple delay in one or more payments, but it is already clear that the debtor will not be able to meet his commitments to the bank, the bank may decide to terminate the contract and immediately request repayment of the amount owing, and the borrower may no longer take advantage of the extension contained in the payment plan. 

If the borrower fails to pay the amount owing, the bank will use the existing guarantee in its own favour. In the case of a mortgage, therefore, the property will be foreclosed and the process of exercising power of sale will begin which, with all the guarantees of legal proceedings, will lead to the sale of the property at auction and the division of the proceeds among the creditors in accordance with the degree of legal priority of their claims.