Cases of debt among pensioners, especially when they result from unexpected health expenses and credits accumulated over the years, have generated increasing public concern. The issue of over-indebtedness in old age is now back under debate after a situation that gained prominence on a Spanish television program, where a retired woman reported the difficulties she faces in meeting monthly payments on an 800 euro pension.
Joana Regidor, retired and with a monthly pension of 800 euros, revealed that she currently owes around 20 thousand euros, an amount corresponding to a loan that she will have to pay off within a year and a half. The reduced pension, added to the household’s fixed expenses and essential purchases, makes it impossible for her to reach the end of the month. These costs were also accompanied by urgent dental treatment, which worsened his financial situation, according to the Spanish newspaper Noticias Trabajo.
The retired woman told her story on the program “Y ahora Sonsoles”, on Antena 3, explaining that, in addition to the main credit, she had to take out a second loan of 6 thousand euros to treat her mouth. After he stopped working due to illness, he started to receive a low pension, which made it impossible to cover all the expenses. Half of your pension goes towards paying off the credit, leaving you with only around 400 euros left for the entire month.
A loan for construction and an interest of 7 percent
During the interview, Joana explained that the credit of 20 thousand euros had been requested to carry out work in an old apartment that belonged to her parents, where she needed to knock down a wall and renovate the house.
This loan has an interest rate of 7 percent, which, according to guest economist Rubén de Gracia, is not particularly high, always depending on the contracted term. In Joana’s case, the credit was fixed for ten years, with an initial value of 19,672 euros plus associated expenses, with just over five thousand remaining to be paid.
The economist also drew attention to the importance of not exceeding 30 to 40 percent of monthly income when taking out a loan, explaining that disproportionate credit could compromise future financial stability. Joana countered that, when she applied for credit, she was still working and had a higher income, according to the source previously cited.
Debt risk in fragile situations
The testimony of this pensioner, with just €800 in pension, reveals the financial vulnerability that many pensioners can fall into when they face unforeseen expenses, especially those related to health or urgent housing works. Difficulties become worse when income decreases after retirement, leading to over-indebtedness scenarios that are difficult to reverse without specialized support, the report also states.
Situation in Portugal
If a similar case occurred in Portugal, it would be covered by Decree-Law No. 133/2009, which regulates consumer credit and obliges banks to assess the customer’s financial capacity before granting a loan.
Interest rates would also have to respect the maximum APR limits defined quarterly by the Bank of Portugal, and Law No. 24/96, Consumer Protection Law, would guarantee transparency and protection against abusive practices.
Case of non-compliance
If the pensioner defaulted, the bank would have to integrate her into PERSI, the Extrajudicial Procedure for Regularizing Default Situations, where solutions such as renegotiation of deadlines or temporary reduction of installments would be analyzed. Only if PERSI failed would it be possible to proceed to judicial collection.
In situations of serious over-indebtedness, the debtor could resort to PEAP or, as a last resort, natural person insolvency, provided for in the Insolvency and Business Recovery Code, with the possibility of exoneration of the remaining liabilities after three years.
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