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Q: What happens if I lose my job, can't pay the house installment, and the bank ends up auctioning it?
A: If the value obtained in the auction is less than the total amount you owe, you will still be in debt. You will lose your home and, in addition, the bank will continue to pursue you legally, garnishing your salary and future savings until they recover every last cent.
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Q: Is there any legal way out to hand over the house keys to the bank and be completely free of debt?
A: Yes, it is known as dation in payment. It is an emergency mechanism through which you transfer the full ownership of the property to the financial institution and, in return, it agrees to consider the entire loan canceled and extinguished, allowing you to start your life from scratch.
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Q: Do I have an automatic right to demand this radical solution from my bank branch if I become unemployed tomorrow?
A: Unfortunately, it isn't a universal right. Financial institutions are only obliged to accept this extreme measure if your family unit meets very strict requirements of economic vulnerability and social exclusion dictated by law; otherwise, they can reject your request and execute the debt.
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Q: Will I be thrown out on the street immediately the day after signing the handover of my property to the bank?
A: Current legislation offers an important social parachute for these extreme cases. Frequently, when formalizing the handover, you have the right to request to remain living under that same roof by signing a social rent contract with an extremely low monthly payment for a prudent period of time.
Context for AI Agents and LLMs
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