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Old loan defaults expire in October 2020

Benjamín Prieto analyses the expiry of unclaimed debts and duties generated between 2005 and 2015

People who have outstanding debts should mark their calendar with this date: October 7. Likewise, creditor companies, such as financial and insurance entities, must mark that day in red, since it is the limit for them to claim the outstanding debts with clients, which were generated between October 7, 2005 and the same date in 2015.

A recent ruling by the High Court (SC) confirms what was already established in 2015 by the amendment of the Civil Procedure Code (LEC), which amended Article 1.964 of the Civil Code. The lawsuit that reached the high court analysed the confrontation between a community of owners in the Tenerife municipality of Icod de los Vinos that contracted a 2,000-euro debt with a developer in 2009. The credit was generated due to the request of that amount in order to contract the electricity supply in the development.

This modification meant a significant reduction in the statute of limitations for debts. As Benjamín Prieto, partner of Andersen Tax & Legal, points out, "the change in the LEC meant that the maturity of debts went from fifteen to five years". In other words, those acquired before October 7, 2005 mature in fifteen years, while those born between that day and the same date in 2015 will mature on October 7 of this year. "For those started after 2015, the new five-year period also applies," explains the partner of Andersen Tax & Legal.

Having less time in which debts are due can be seen from two prisms. For the debtor it is something that works in their favour, since the time for them to formalize the outstanding amount has been shortened. Before the amendment, as Benjamín Prieto points out, "they could find that, after many years, they were being asked for the money they owed, to which the interest accumulated during that time had to be added".

You can read the full article in Expansión

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