What is a defaulter list?

Being added to one of these much-feared lists can significantly limit your ability to qualify for financing.

A defaulter list is a record of individuals and legal entities that have failed to repay some form of debt. However, in reality there are many ways to end up on one of these lists, and they can be quite damaging to those whose names appear since this can substantially restrict access to any type of financing.

These lists are used in Spain by many companies (including banks) as a source of information about the payment history and status of their customers.

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There are several defaulter lists in use today. One of the most important is the one managed by Spain's National Association of Financial Credit Institutions (the ASNEF in Spanish); another file that is heavily consulted by companies is the one maintained at the Registry of Unpaid Receivables (or RAI by its acronym in Spanish). Finally, another well-known list is the BADEXCUG, which is managed by the company EXPERIAN.

How does a person or company end up on a defaulter list?

When we think of a defaulter list, we might assume that it only reflects the names of major debtors; in other words, people who have been careless with their finances and now owe huge amounts of money to a long line of creditors. However, in fact, this is not the case. To end up on a defaulter list, you do not necessarily have to be in a lot of debt or have multiple creditors.

In Spain, defaulter lists are regulated by Organic Law 15/1999 on Personal Data Protection. In the end, information about our wealth and finances is just one more asset we need to take proper care of. The first condition required for addition to a defaulter list is to have a debt that has been past due for at least four months. The amount of the debt is not relevant. A person can be added to a defaulter list whether they have a debt of €20, €30, or €10,000.

However, before a creditor can add you to a defaulter list, they must have sent you a demand for payment letter for the debt by certified mail. Finally, the party responsible for the defaulter list must notify you that you have been added to the list within a period of 30 days or less.

Then, there is a temporary window of time during which you can pay off your debt. By doing so, you will be quickly removed from the defaulter list before it can have a negative effect on your customer profile.

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What are the consequences of being on a defaulter list?

When you are included on a defaulter list, your options for accessing loans and credit (i.e., bank financing) are significantly reduced. From this moment on, banks and other loan providers may question your ability to repay debts. As a result, they will often refuse to grant you money or credit.

How does a person get removed from a defaults list?

To be removed from a defaulter list, you need to repay the outstanding debt that led to your initial inclusion in the list. Once this repayment has occurred, the manager of the list must delete your data within a maximum period of one month. This will only be done, however, after consulting with the company that originally put you on the list, to verify that the outstanding amounts have indeed been paid back.

Furthermore, by law, you can only be kept on a defaulter list for a maximum of six years. After this time, your data will be deleted from the list.

Appearing on a defaults list can represent a real headache for anyone trying to carry out normal financial activities. For this reason is very important to make all of your payments on time, and even if you have a dispute about a bill you don't agree with, you should never allow your information to end up on a defaults list.

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