COVID-19. Amendments to the public moratorium applicable to loan repayments
As of today, bank customers are able to benefit from an extension of the duration of the public moratorium created in the context of the COVID-19 pandemic. This moratorium now applies to more potential beneficiaries and to more types of loans.
The amendments to the exceptional measures to protect the loans of households, firms and other entities come into force today, following the publication of Decree-Law No 26/2020, which implements the second amendment of Decree-Law No 10 J/2020..
Extension of the duration of the moratorium
The duration of the public moratorium is extended to 31 March 2021. This extension applies automatically to loans already subject to the moratorium, unless bank customers inform the credit institution of their opposition to the extension by 20 September 2020.
A deadline for the application of the public moratorium has been set. Therefore, bank customers that have not requested this aid, but still wish to do so, must communicate their intention to the credit institutions by 30 June 2020.
Wider range of loans
In the case of consumer credit, the public moratorium now applies to more types of credit agreements, covering all loans secured by mortgages, financial leasing of residential property and credit for financing education services, including academic and vocational training.
These loans are now eligible for the public moratorium even if they already benefit from a private moratorium. To apply, bank customers must send credit institutions a document certifying that all tax and social security obligations have been duly fulfilled, where applicable, by 30 June 2020. Customers who already benefit from the public moratorium for other loans with the same institution are exempted from sending this document and the public moratorium is applied automatically.
More potential beneficiaries
The conditions for access to the moratorium have been altered by broadening the scope of bank customers that may request the application of the moratorium:
- Consumers who do not reside in Portugal and meet all other conditions may now benefit from the public moratorium;
- Situations associated with loss of income (preventive or sickness isolation or providing assistance to children or grandchildren, as described in Decree-Law No 10-A/2020 of 13 March 2020, reduction of the normal working period or suspended employment contract, unemployment registered with the Portuguese Institute for Employment and Vocational Training, workers eligible for benefiting from extraordinary support to the reduction of the economic activity of self-employed workers, workers of entities whose business establishment or activity has been ordered to be closed during the declared state of emergency) are now included whether they apply to the borrower or to another household member;
- In addition to the loss of income referred to in the previous paragraph, the public moratorium may also apply to borrowers who experience a temporary loss of at least 20% of their overall household income as a result of the COVID-19 pandemic.
Now, only bank customers obliged to verify that they are not in payment default to the Tax and Customs Authority and Social Security are required to do so, and the document certifying such obligations have been duly fulfilled must be sent to the credit institution within 15 days of the date the request for application of the moratorium was submitted.
Enforceability of late payments is suspended
Decree-Law No 26/2020 of 16 June 2020 clarifies that, for the duration of the public moratorium regime, the enforcement of payments related to loans benefiting from these measures is suspended, including the enforcement of instalments in arrears at the time the application of the moratorium was requested, and therefore default interest and other contractual penalties cannot be charged.