Discharge from the obligation to pay debts

Lately a question we are repeatedly asked is how to secure payment of an existing debt from a consumer or mortgage loan taken out with a consumer-credit institution, which usually operate in shopping centres or online. These loans are sold to third parties in debt-collection portfolios, and it is not possible to tell fraud from the genuine creditor.

Despite the debtor’s efforts to identify who holds the loan, this is not always possible, and the debtor subject to collection may end up suffering a kind of telephone harassment; these situations usually coincide with a lack of transparency as soon as explanations are requested about the amounts, the powers of representation or who holds the debt.

For this situation, the legal system offers a very useful and sometimes little-known tool, through the Voluntary Jurisdiction Act reformed in 2015: the procedure for judicial deposit of the debt, whereby the debtor, having first served notice on the principal creditor and attaching the relevant documentation, can offer payment through a secure route. We call it secure because, in order to collect the deposited debt,  the creditor must prove their standing before the court as well as the authority under which they act — something that previously could not be done with full certainty.

The court will not only hand over the amount to the creditor but will also declare the debtor released from the debt; after making the payment, the debtor will have a supporting document to prove it wherever necessary.

Since this is very common but there is a wide range of loans and debts with or without security, do not hesitate to consult us so we can look at the particulars of each case and advise you on the best solution.