Arrears prevention

Before entering into a credit agreement, bank customers must:

• Consider whether their income is sufficient to ensure the payment of the debts they intend to incur – the credit instalments are a fixed monthly expenditure of the family budget, with impact until the loan is repaid in full;

• Provide the credit institution with clear and true information about their financial situation so that the institution makes a careful assessment of their ability to repay the loan.

Over the term of the credit, bank customers must:

• Maintain a preventive attitude, anticipating possible difficulties in complying with the financial commitments they assumed;

• Warn the credit institution of the possibility of not being able to pay the instalments of the credit agreements.

Credit institutions should also monitor the execution of their customers’ credit agreements, aiming at arrears prevention by submitting proposals that seek to restructure the credit.

Pre-Arrears Action Plan (PRAP)

Credit institutions should permanently and systematically monitor their customers’ credit agreements to identify possible signs of payment difficulties. To this end, institutions should define and implement a pre-arrears action plan (PRAP).

Bank customers who warn the credit institutions about the risk of defaulting on credit agreements, due, for example, to unemployment or illness, are entitled to receive a document from the institution containing information about their rights and duties. They must also be informed of the contacts that the credit institution has at their disposal to receive their communications.

The credit institution must assess the customers’ creditworthiness and, when it finds that they have the means to avoid default, it must propose solutions adapted to their financial situation, objectives and needs.

In order to allow the creditworthiness assessment, customers must provide the information and documents requested by the credit institution within 10 days.

Bank customers may file a complaint in the complaints book of the credit institution or directly with Banco de Portugal if they consider that the credit institution has not provided due support after having been advised of the possibility of default.