Once again we have been invited to talk about economics in of Mona Loca . On this occasion we have talked about a very familiar issue: the reunification of debts .
I will take advantage of the interview, which you can hear (in Catalan) at the end of this post, to explain the basic principles of a debt reunification.
What is a debt reunification?
It is a unification of all personal loans, credit card debts, the debt due from the previous mortgage and other possible debts (liens, defaults to Social Security or Finance, etc.) in a new mortgage loan on the habitual residence.
The agents involved in a debt reunification are:
- The client family.
- The financial intermediary, badly called debt reunifier (does not grant the mortgage, its function is to negotiate, process and advise the client before the bank).
- The bank that grants the reunification of debts, that is, the new mortgage.
- The appraiser.
- The notary who gives faith.
When is a debt reunification recommended?
Debt reunification is not recommended, it is necessary in certain cases. It is a useful financial product for families that have over- indebted and need to balance their finances and group all their debts into one, mortgage, to be able to pay less per month (although the outstanding debt increases since it is necessary to include the expenses of the reunification of debts and loans).
Basically there are two types of people who request a debt reunification:
- Those who have reached the situation of financial imbalance due to inadequate consumption patterns (spend more than they enter). These families must be taught to spend properly, or the reunification of debts will be a temporary patch and in a time they will be the same.
- Families who have had trouble reaching the end of the month due to situations beyond their control (unemployment, extraordinary sickness expenses, etc.). This type of client is the one that a group of debts and loans will help them return to the path of financial normality.
Reuniting with a bank or a mortgage broker?
It depends on the client’s time, knowledge and negotiation capacity . If the client himself is able to properly process a reunification of loans and debts, and has the appropriate training, he can do so directly with the bank.
In another case, the best option is to hire the services of a professional mortgage broker (who charges a fee).
How to know if the intermediary complies with the law
The law that regulates the reunification of debts through a financial intermediary is Law 2/2009, which among other requirements requires:
- Be registered on the website of the Consumer Institute or the Registry created by the corresponding Autonomous Community.
- Deliver a previous information to the client, with their rates, rights, etc.
- Have contracted a liability insurance .