From the mortgage with the bank to the debt: when can I use the balance and excerpt?

In this period of economic crisis, you will have repeatedly heard of Balance and Excerpt. If you are a debtor in difficulty or a creditor who needs to collect his credit quickly, the Balance and Excerpt could prove to be a convenient solution for both parties.

What it is forced recovery of the credit

What it is forced recovery of the credit

Due to a series of events, they cannot pay his due. At this point his, in order to assert his reasons, would find himself forced to initiate through a lawyer the procedures for a forced recovery of the credit. This, however, can be risky for the times are often long and the legal costs expensive. It could therefore be advantageous for both parties to agree alternatively. They can propose to his to pay $ 20,000 immediately against the initial debt of $ 30,000 and thus see his debt situation definitively resolved with a debt savings of around 30%. In turn, his, accepting this proposal, would see a large part of the credit return, saving the money necessary for legal expenses.

This method of agreement takes the name of Balance and excerpt, precisely because the payment of an agreed part of the debt (balance) definitively cancels the debt situation (excerpt).

The Balance and Excerpt is an agreement that can be entered into both between private individuals, and between one or more private individuals and a bank, and between the private individual and the State, in the event that the debt concerns taxes due and not paid.

Balance and excerpt between private individuals

Balance and excerpt between private individuals

There is no precise methodology for carrying out a Balance and Excerpt proposal between individuals, nor a minimum or maximum allowed reduction of the debt. However, it is advisable to prefer the written form and the channel of the registered letter with return receipt or pec, so as to be able to leave a trace.

To protect itself, the creditor can add a clause in which the debtor is informed that, in the event of non-payment even of the agreed reduced amount, he may return to demand the original sum. This is not possible if the two parties have agreed by replacing the previous contract with a new contract in which only the amount due has changed. In this case the creditor, in the event of non-collection of the amount due, will be able to recover by legal means only the reduced credit agreed with the new contract, no longer the original sum. Better then to be followed in this procedure by an expert in the field, because the pitfalls are around the corner.

Balance and excerpt with a bank

Balance and excerpt with a bank

A little more difficult is to be able to reach an agreement with a bank through Balance and Excerpt. Before considering this possibility, the credit institution will have initiated a bad debts procedure and reported the debtor to the Crif and the Central Bank of Italy. Furthermore, if there are debt guarantors, the bank is unlikely to be willing to accept a reduction, unless the forced recovery procedure is particularly complex and unfavorable.

The situation is simplified if the bank in question has sold its credit to a debt collection agency. These agencies purchase the bank’s loans at a much lower amount and subsequently have every interest in agreeing with the debtor to obtain a small profit margin as soon as possible.

Let’s take an example: He has a debt with the bank of $ 80,000, the bank sells it to a debt collection agency (often linked to the bank itself) for $ 20,000. At this point if He offers the agency a balance and excerpt of $ 35,000, the agency will be well inclined to accept it, because he will still have earned $ 15,000, without having to resort to the lawyer.

The Court of Cassation with the judgment 22231/134 also established that, in the event that there are multiple debtors, if only one chooses to make use of the balance and excerpt, the others are also benefited. For example, He and She have a debt with the bank for $ 100,000 ($ 50,000 apiece, therefore), and She resolves her debt situation with Balance and excerpt for $ 30,000. At this point, He will not owe the remaining $ 70,000 to the bank, but only his share which will remain unchanged, $ 50,000, because She has agreed with the bank that his $ 50,000 share is resolved by paying only $ 30,000 immediately.

Balance and excerpt with the state

Balance and excerpt with the state

The 2019 budget law provides for the possibility of adhering to the so-called Tax Peace, which allows all those citizens in “serious and proven” economic difficulties to resolve their debt situation with Balance and excerpt of their tax collection documents (for example VAT payments or Social Welfare not paid), by submitting an application to the Inland Revenue by July 31, 2019. The debts that can be resolved with Balance and Excerpt are those relating to the period from January 1, 2000 to December 31, 2017, relating to taxes or unpaid social security contributions. The requirements to be able to join this tax peace are:

  • a family Isee of no more than $ 20,000;
  • liquidation procedure open at the time of submitting the application.

The application to be submitted must contain the “SA-ST” form which can be downloaded from the website filled in in all its parts and the documentation relating to the requirements necessary to return to the amnesty. This application must also specify whether you intend to pay in one installment or in installments. You can present the material online, via PEC or directly at the counter.

If all the requisites are met, the debt will be reduced based on the amount of your Isee:

  • with an ISEE not exceeding $ 8,500, 16% debt will be due;
  • with an Isee between $ 8,500 and $ 12,500, 20% of the debt will have to be paid;
  • with an Isee from $ 12,500 to $ 20,000 you will resolve your pending situation by paying 35% of the amount due.

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