PARI and PERSI: What are these processes in credit default?

Encountered these terms for the worst reason? Don't worry... If you are in default, there is always a solution. The credit intermediaries of Poupança no Minuto are here to help you, without judgments and (still) without any cost. But let's get to know these procedures better next. 

PARI and PERSI are regulations in case of credit default.

Both the Action Plan for Default Risk (PARI) and the Out-of-court Procedure for Regularization of Default Situations (PERSI) are related to non-compliance with loan repayment.   

The PARI refers to the document that each bank holds on the procedures to be adopted to prevent credit contracts, but the PERSI is the document with procedures to be activated in case of actual non-compliance with a credit contract.  

These two plans are in force in Decree-Law no. 227/2012, of October 25, as well as in Bank of Portugal Notice no. 17/2012, of December 17.

PARI refers to non-compliance prevention 

The regulated document of PARI encompasses information about the procedures to be followed when executing credit contracts; which may be considered an indication of a decrease in financial capacity of a client; deadline to contact a client showing signs of default risk, and the solutions that should be proposed to a client to avoid default risk.

This document must be present in credit institutions that grant loans and applied to all customers who enter into credit agreements with them.

In order to prevent default by these customers, the bank must take the following steps: 

• Evaluate a client's financial capacity;  
• Open a communication channel for customers to notify any difficulties in compliance;  
• Manage a client's information and their credit contract in an integrated manner.  

PERSI applies after default 

The PERSI starts as soon as the non-compliance of payment of installments related to a specific customer's credit is detected by the bank. In this case, the internal and extrajudicial process begins with the identification of the reason for non-compliance, evaluation of the client's financial capacity, and, if necessary, presentation of proposals to regularize the debt.

So, based on the PERSI, first you should know that the banking institution cannot terminate the contract due to default, nor pursue legal actions or transfer its contractual position (unless it is to other banks). In the latter case, the bank to which the contractual position is transferred must proceed with the PERSI in the same way.

Afterwards, know that PERSI is a procedure with no costs for the client, it is not allowed to charge commissions for the renegotiation of credit conditions.

And the whole process requires confidentiality, both from the bank and from the client.  

So, needing to move forward with the PERSI, the bank must follow these steps:

• First, communicate with the client within 15 days about the delay and the amount due.
• If the customer doesn't regularize the outstanding amount, the bank activates the procedure between the 31st and 60th day from the delay.
• When activating the PERSI, the bank must inform the customer within 5 days of activation and request information to proceed with the financial capacity assessment; 
• Afterwards, the customer must send the information and documents within 10 days to proceed with the evaluation;  

• Finally, the bank has a period of 30 days from the activation of PERSI to inform the client about the evaluation result.

In case of a financial capacity assessment with a positive result, that is, allowing the client to regularize the default, the bank must present proposals to the client to settle the debt. Consequently, the client can accept or negotiate, with a deadline of 15 days for the bank's response, and 15 days later for the client's response, in order to reach a conclusion on the solution to follow.

If the financial capacity evaluation has a negative result and the bank cannot regularize the default, it is not possible to reach an agreement during PERSI. Therefore, the client can seek help from a credit intermediary within 5 days to find other solutions.

But in the case of being a credit with a guarantor, the bank has 15 days after default to notify the guarantor about the arrears and the amount due. Then, it has another 10 days to settle the debt, or to request the activation of PERSI.

And if the client defaults on more than one credit in the same bank, only a single PERSI is initiated.

Are you in default on your credit, or are you afraid you might be? Do not worry, the credit intermediaries at Savings in a Minute can help you find a solution! Contact the agents for a quick and free service, and solve this challenge (without challenges).