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The Financial Glossary: ​​what does debt, attachment and assignment of the fifth mean?

The Financial Glossary: ​​what does debt, attachment and assignment of the fifth mean?

On the occasion of the Month of Financial Education, which occurs in October, KRUK offers us a glossary to better understand terms such as debt, foreclosure and assignment of the fifth.

Is October Financial Education Month?

October has now begun, but perhaps not everyone knows that this is the Financial Education Month. The idea is to disseminate correct information in the financial field to improve the culture and skills of people in this area. In this regard we find KRUK, credit expert, who proposes an interesting solution to clarify the issue: a glossary. After all, it is from the word that everything, even misunderstandings, is born, so here are some financial terms explained for the beginners.

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The KRUK Glossary: ​​what does debt mean?

Debt situation – The condition that arises if you are unable to pay the expenses you have already benefited from. For example, the credit card itself is a temporary debt situation. If this is not paid at the end of the month it becomes a debt.

SIC (Credit Information Systems) – These are databases that collect positive and negative information on those who request the disbursement of loans to financial operators. These also collect negative data, such as missed installments, and are gods bad payer records.

Employee loans – Personal loan formula, in practice those who request a loan can freely decide to repay it with this formula. The latter is composed of: an (agreed) installment charged directly to the salary or pension that cannot exceed 20% of the salary. Despite it cannot be easily renegotiated or consolidated and the costs are generally higher than traditional loans. The assignment of the fifth is a very convenient form of loan, also considering that it is covered by mandatory life insurance.

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Foreclosure – Foreclosure is the forced expropriation of an asset from a person who is in a debt situation. It is an extreme consequence of the non-settlement of the debt to the creditor. Real estate (furniture, appliances, cars) and real estate can be foreclosed. Any assets held by third parties (i.e. receivables from third parties, such as salary or pension) are also included in the list. However, some assets cannot be attached: wedding ring, clothes, linen, pets, sacred objects intended for the exercise of worship, and also objects that the debtor is obliged to keep for the performance of a public service, letters, writings family, the manuscripts.

KRUK’s advice for managing debt situations

What happens if you don’t manage a debt – If you completely ignore a debt situation without trying to mediate with the creditor, different scenarios open up. First of all it is necessary to bear the additional costs of legal expenses, there is a risk of an injunction. An unmanaged debt situation can even lead to not being able to sell your home or access an inheritance.

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Debts are inherited – The disappearance of a loved one is, in itself, already a painful event. Sometimes there are also possible problems related to inheritance, with all the bureaucracy that follows. The heirs, in fact, receive both the credits and the debts of the deceased. A good solution might be to accept the inheritance with inventory benefit.In this way the two assets are kept separate until the reconstruction of the assets of the liabilities and the conscious choice on the possible acceptance, avoiding damages.

How to avoid a debt situation – Maintaining a good balance between income and expenses. In short, never taking the hardest step of managing your own money. There are several ways to systematically manage your assets. One among many is the 50/30/20. To do this, it is necessary to divide the money into essential expenses (home, food shopping) 50%, superfluous expenses (travel, restaurants) 30% and savings (20%).

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How to manage debt – Never ignore a debt situation but take action. Read carefully the documentation that solicits the payment of a debt and contact the creditor immediately. It is essential to start a negotiation on the repayment plan more suited to your income and expenses.