THE social and judicial reality regarding banking law issues has taken a turn in recent years in favor of protecting consumers.
We at White Baos have helped and continue to help those affected by abusive clauses and toxic financial products.
In today’s article we want to draw attention to the Cession of Credits, which has been widely used in Spain without individuals debtors knowing what was being done with their debts.
The Assignment or transfer of Credits is based on article 1112 of the Spanish Civil Code (cc), which establishes the possibility of transmitting all the rights acquired by virtue of an obligation. More specifically article 1878 CC, establishes the transfer of mortgage credit to a third party.
In summary, through the Assignment of Credits, an Assignor, in this case, the creditor bank, cedes the credit to a third Assignee, who will become the new creditor, replacing the bank and in some cases without the consent of the debtor, being the debtor with a debt to a third party, without having received the required notice.
Normally these assignments of loans, credits and mortgage loans are made in bulk by the banks that sell them to what are known as vulture funds, for a value much lower than the actual and current value of the debts.
Spanish courts have established that despite not being part of the assignment, the debtor has the important right of preference to accept or refuse such a transfer, meaning that the debtor may acquire the credit that the bank is trying to transfer to a third party, for the same value and in the same circumstances.
This means that the debtor could find a new option to fund the debt, which in most cases is usually of vital interest to the individuals debtor, who must be notified of the Assignment and have a period of nine days to exercise their right of preference acceptance.
Thus, debtors who have a mortgage with a Spanish bank, if it was assigned to a third party, could ask to use this right and request the right to purchase the credit for the same price as the fund, which would in most cases offer a very substantial reduction from the original value of the debt.
It seems possible that in the not too distant future the Court of Justice of the European Union (CJEU) will have to decide on these transfer of credit throughout Europe and in the event of deciding that they have not respected the rights of the debtors, the transfers could be considered null and void,
In theory, this could have an extraordinary impact on the funds that acquired them and a benefit to the debtors.
If you are in this situation or know someone who is, you should know that you have rights and that we can possibly help you so feel free to contact us for advice on this or any other legal matter.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
White & Baos
Telf: +34 966 426 185
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