Contracting debt is common for entrepreneurs and businessmen, but to avoid problems it is essential to have information about what types of debt exist, when a debt expires …
It is very likely that as part of the financial decisions you make, you will incur debt at some point. Different types of debt can be contracted not only with a bank, but also with the Treasury or with any other public or private entity.
When contracting them, many questions arise, such as when to prescribe a debt or how to respond to a debt notification sent by a creditor.
Learn more about the different types of debt, their characteristics and when a debt expires below.
Types of debt
There are at least 7 types of debt:
- Insurance: occurs when the terms for the cancellation of a policy expire, prior to the renewal time. In the case of this debt, the insurer has up to five years to claim payment for it.
- For rent: it happens with the non-payment of the rental fees and it also expires after 5 years.
- Of personal loan: it also includes the non-payment of the interests generated of the debt and of the credit cards.
- Mortgage type: it has a claim period from the bank of up to 20 years.
- Treasury: prescribes in a period of 4 years, in which the Treasury reviews the income statement.
- Fine: includes the amount of the fine incurred and the interest for late payment of the same. It has a prescription period of up to four years.
- Household supply: or basic services such as electricity, water, gas, telephone and any other household service, which must be paid in a period of 5 years.
When do you prescribe a debt?
First, we are going to explain the concept of debt prescription. Different civil codes coincide in defining that the prescription is a way of acquiring foreign things or of extinguishing the actions and rights of others, for not having exercised said actions and rights for a certain period of time and meeting the other legal requirements.
Likewise, there are two types of prescription, the acquisitive one, which allows obtaining the domain of the object belonging to another person, and the extinct one, which puts an end to the obligations. In both cases, the requirement for the prescription to be given is the passage of time.
As for what is required to prescribe a debt, there is a maximum period of five years for its extinction, without a specific period specified. There are two types of conditions (of which at least one must be met) for a debt to prescribe:
- That the debt is not explicitly recognized by the debtor.
- That the creditor has not provided any means – either a notarial request or a letter – to contact the debtor and notify him of the debt.
Expiry of a debt
When does a debt expire? Generally, debts expire within 5 years after being contracted. It is taken into account that, for the debt to expire, it has had to pass the statute of limitations.
Now that you know the different types of debt that exist and their characteristics, you can be more secure and not be afraid when it comes to contracting any. It is something common in the business world, you just have to be forewarned not to run any kind of last minute improvisation.…