Do you qualify for debt consolidation or salvage plan?

House payments, car payments, and credit card payments can drain your income when debt becomes unmanageable.

If this is your case and you face difficulties in meeting your debts on time, perhaps the time has come to consider the reorganization route. This product would allow you to reduce the monthly installment you pay for your loans.

Of course, take into account that no financial institution wants to have bad payers, so the better your credit record, the greater your chance of being a candidate for these plans.

The documents requested by financial entities are the salary certificate, the employer’s order, the income certification -if you are an independent worker- and proof of debts with informal sector entities. Shutterstock (Shutterstock)

If this is your first time ordering this product, your chances of getting a yes answer will also increase.

Depending on the financial institution you go to, the instrument takes different names – repeat plan, consolidation, consolidation, refinancing, or readjustment of debts – but the objective is the same: reduce the amount you pay per month for your debts to avoid those who defaults on payments.

How do they do that? The financial entity buys the balances of some or all of the client’s debts and unifies them in a single credit operation.

The loan amount is not reduced. The bank does not forgive an amount of the debt, but it offers a better interest rate and term conditions. The latter is usually broader than the previous one and is necessary for the fee to be lower.

The result will be a lower monthly payment and more money available to meet other expenses, whether obligations or fun. Know the offer by an entity at the end of this note.

These loans can use different payment methods: salary deduction, automatic debit from the savings account, and payment by electronic means or over the counter.

The Popular and Community Development Bank (BPDC), the Bank of Costa Rica (BCR), the National Bank of Costa Rica (BNCR), Davivienda, Grupo Mutual, Mucap, Coopenae, and Coopeservidores are some of the supervised entities that offer them.

These entities report greater dynamism in executing these products in the last year.

BAC Credomatic, Scotiabank, and Coopealianza were consulted, but no response was received at press time.

Do you qualify or not?

This is the doubt that overwhelms those debtors who manage to pay their debts on time, but just barely, and that is why they are looking for a way out.

From the outset, the debtor must be well paid and have not shown arrears more significant than 60 days in his history. This may vary depending on the financial institution, but most use this parameter.

Although the institutions indeed evaluate the cases independently, there are general conditions.

To begin with, salaried debtors from the public or private sector are accepted and independent workers (except the National Bank). The most important thing is demonstrating that you receive a stable income from month to month.

In addition, the level of indebtedness that the client will maintain when applying the recast is evaluated. This is a maximum between 50% and 60% of debts over income. The National Bank will finance people with more than 40% of their income committed to debt installments.

The percentage of borrowing requested may vary depending on the excellent payment behavior of the debtor.

Likewise, the guarantee will always be a requirement. The BCR, Grupo Mutual, and Mucap will request a mortgage guarantee, so you will not be subject to their recast products if you do not have an asset that can be mortgaged.

In general, when a mortgage guarantee is requested, the entity will carry out an appraisal of the property to know how much the amount that will be loaned to the client amounts to. Usually, up to 80% of the property’s value is loaned, but it can be higher. Banco Popular and Banco Nacional extend coverage up to 100% of the asset or investment plan value.

If you do not have an asset to be mortgaged, some plans request other types of guarantees, although they offer a shorter term.

El Popular offers the option of only a fiduciary guarantee; that is, when the debtor provides joint and several liabilities that another person (guarantor) will take over the debt in the event of non-payment. In this case, the term is up to 15 years.

For its part, what Coopenae is requesting is a promissory note for a maximum term of 14 years. If you need more time (30 years), you ask for a mortgage guarantee.

The National Bank, for its part, receives mortgage guarantees, furniture, bonds, promissory notes, among others, with a maximum financing term of 20 years.

Another essential requirement, in some cases, is that, depending on the level of indebtedness, they will ask you to stop acquiring more debts.

It is only an invitation not to borrow more, with the aim that you can clean up your finances; it is not a mandatory requirement.

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