The COVID-19 pandemic has affected not only the country's public health, but also the financial health of many Portuguese people. Situations such as unemployment, layoffs, salary reductions and temporary closure of commercial establishments have left many citizens in a situation of inability to fulfill their obligations.

When we talk about debts and creditors, our thoughts inevitably turn to a set of complicated situations and problems that seem inexhaustible.

The legislator, aware of the impact that this epidemiological situation can have on everyone's lives, tried to create a set of temporary measures to prevent families from collapsing financially. As such, a general moratorium was created on compliance with obligations to the banking system, evictions were suspended, as well as the effects of the termination of lease agreements, and mechanisms were created to defer rent payments.

Tax enforcement proceedings that are ongoing or to be initiated, the possibility of the Tax Authority providing any guarantee and the payment plans in progress for debts to Social Security were also suspended.

However, these measures, as the legislator states each time it regulates these matters, are of an exceptional and temporary nature. Deferrals and moratoria are nothing more than a temporary postponement of the time to comply with obligations.

However, resorting to all these measures should not be your first option. If you have debts, the most appropriate course of action is to negotiate with your creditors. Negotiation will allow you to maintain your good name and credibility with those you owe money to. However, negotiating debts is not an easy task in itself and negotiations do not always result in a positive outcome.

Therefore, the legislator created the Public System for Supporting Conciliation in Over-Indebtedness (SISPACSE). This tool is a (new) means of alternative dispute resolution, in which the debtor, provided that he is an individual and is not already insolvent, and creditors, with the help of a Conciliator, will outline a plan for fulfilling obligations, which satisfies the interests of all parties.

This agreement will be deposited with the Directorate-General for Justice Policy (DGPJ) and the adhering creditors will be prevented from instituting, during the negotiations, any action or taking any enforcement action aimed at collecting their debts, as well as from requesting the debtor's insolvency. However, creditors who at the time of the negotiations have already taken enforcement action to satisfy their debt, such as enforcement action, will not be prevented from participating in SISPACSE.

The agreement, once concluded, will be enforceable. The expected duration will be 60 days, extendable once for the same period of time, and the initial cost is 30 euros. The biggest disadvantage of SISPACSE to date will undoubtedly be the fact that this system does not cover debts to the Tax Authority and Social Security.

The initiative to negotiate under this new system will always be the debtor's. Therefore, if you are in difficulty, want to know more about this subject or how you can avoid an imminent situation of insolvency, now you know: speak to a Solicitor.

Link: https://correiodominho.pt/cronicas/a-epidemia-das-dividas-e-a-fuga-ao-estado-de-insolvencia-sispacse/13116