The Term of Confession and Debt Renegotiation has increasingly become a legally effective and safe instrument for the creditor in a negotiation.
What is a Debt Confession and Renegotiation Term?
The Debt Confession and Renegotiation Agreement is a quick instrument to ensure your rights. Especially when the agreement is broken, since it consists of an extrajudicial execution order. Given the unpredictability of commercial relations, this document is a valuable tool for companies.
Regardless of size, be they small or medium, all types of business can benefit or protect themselves with this document. For this reason, we have listed in this article five particulars of the Debt Confession Term.
1. Legal protection of a Debt Confession Term
The Debt Confession and Renegotiation Term is a contract signed between two or more parties that offers the creditor a legal guarantee of payment by the debtor.
In other words, this contract is established with the intention of obliging the debtor to pay off a certain debt. Thus, it is essential to verify the legal requirements in the constitution of this term. For this, it is important to check the provisions of article 784, item III, of the Civil Procedure Code (CPC).
2. The main aspects of a Debt Confession Term
The term must specify the identification of each of the parties and their respective responsibilities. In addition to the requirements above, the amount of the debt must be written in full and must also appear in numerical form. It may also contain the form and date on which the payment must be made, interest rates, among other specifications.
Likewise, to be legally valid the document must be dated and signed by the parties involved and two witnesses. It is also recommended that the contract be registered with the Registry of Titles and Documents. If it is of interest to the creditor, the debt confession term may be accompanied by other guarantees such as the promissory note and the duplicate.
3. The guarantees that may be demanded by the creditor
The Debt Confession Term can be established with or without guarantees. However, in most agreements it is necessary for the creditor to give a security interest. For example, if the term relates to the release of a loan, you may require a mortgage on a property. Just as it is possible to sell a vehicle to release a loan. In summary, the main guarantees required are usually that of guarantor, mortgage of immovable property, pledge of immovable property and security.
4. The term as an extrajudicial title
The Term of Confession of Debts is considered by the jurisprudence an extrajudicial title from the moment of its signature. As already mentioned, this written agreement gives the creditor the right to compel the debtor to comply with its obligation.
This legal basis is linked to the fact that it is a private document signed by the debtor and two witnesses. Therefore, with the non-performance of the debtor, the creditor’s right to execute the debt in court is born. Furthermore, debt renegotiation is a contract that obeys all general rules that govern contracts that are in the Civil Code.
5. The advantages of using a debt confession term
Many companies end up in litigation with debtors, after sending countless collection letters without return. So, the process of receiving a debt turns out to be expensive both in terms of time and in terms of costs.
In addition, the debt acknowledgment term allows you to specify all the clauses of the written agreement. In this way, it prevents the debtor party from negating its obligations. And, of course, in case of non-compliance, the company can file a lawsuit. Procedure that will have the purpose of requiring that the agreement is executed according to the agreed terms.