PARI and PERSI: What are these processes for non-performing loans?

Encountered these terms for the worst reason? Do not worry... If you have defaulted, there is always a solution. The credit intermediaries of Poupança no Minuto are here to help you, without judgment and (still) without any cost. But let's learn more about these procedures next.

PARI and PERSI are regulations in case of credit default.

Both the Action Plan for Non-Compliance Risk (PARI) and the Out-of-Court Procedure for Regularization of Non-Compliance Situations (PERSI) are related to the non-compliance with credit installment repayments.

O PARI refers to the document that each bank holds on the procedures to adopt in order to prevent credit contracts, but the PERSI is the document with procedures to activate in case there is already non-compliance related to a credit contract.

These two plans are in force in Decree-Law No. 227/2012, of October 25, as well as in Banco de 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; what can be considered an indication of a customer's decreased financial capacity; deadline for contacting a customer showing signs of default risk, and the solutions that should be proposed to a customer to avoid default risk.

This document must be present in credit institutions that grant financing, and applied to all customers who enter into credit contracts in the same. 

In order to prevent non-compliance by these clients, the bank must take the following steps:  

• Evaluate a client's financial capabilities.  
• Open a communication channel where the customer can notify when facing difficulties in compliance.
• Manage the information of a client and their credit contract in an integrated way.

PERSI applies after breach 

The PERSI process begins once non-compliance with the payment of installments of a credit related to a specific client by the bank is detected. In this case, the internal and extrajudicial procedure starts 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 of all, it must be known that the banking institution cannot terminate the contract due to default, nor proceed with 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 cost-free procedure for the client, not being allowed to charge commissions for renegotiating credit conditions.

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

So, in order to proceed with the PERSI, the bank must follow these steps: 

• First, communicate with the client within 15 days about the delay and the amount owed.
• If the amount in default is not regularized, the bank will activate the procedure between the 31st and 60th day from the delay.
• When activating PERSI, the bank must inform the client within 5 days of activation and request information in order to proceed with the financial capacity evaluation.
• Afterwards, the client 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 result of the evaluation.

In case of a positive financial capacity evaluation, meaning the client can regularize the default, the bank must present proposals to the client to settle the debt. Therefore, the client can accept or negotiate, with a 15-day deadline 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 assessment has a negative result and the bank cannot rectify the default, it is not possible to reach an agreement during the PERSI process. 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 guarantor, the bank has 15 days after default to notify the guarantor about the default and the amount due. Then, there are 10 days to pay off the debt or request activation of PERSI.

If the customer defaults on more than one credit in the same bank, only a single PERSI is initiated.

Did you default on your credit, or are you afraid you will? Don't worry, the credit intermediaries of Poupança no Minuto can help you find a solution! Contact the agents for fast and free service, and solve this challenge (without challenges).