To know how a credit goes extinct is important to know its definition, so, well part from the Spanish Tongue Academy status:
Amount of money or payment that one individual or entity, especially banking ones. loans to another one under certain payment terms and conditions.
So, we refer as credit as a specific amount of money that a Credit Institution or physical person dispose to another one. Such quantity must be returned in a determine period either in bi-monthly or monthly periods consecutively until the full amount is restitud. In addition, in certain occasions an interest rate is agreed on or demands from the credit institution are made such as signing a contract, a credit title, cross guarantee or real warranties.
Following this subject, Article 301 from the General Law of Credit Title and Operations contains the lawful scenarios in which a credit extinction occurs, being the follow:
- Because the beneficiary of the credit occupied the totality of the credit amount or the top amount that was setted
- Because of the expiration of the established terms. Or because there’s notification of contract ending.
- For being in a payment suspension situation, judicial balance or bankruptcy.
- For being death, legal capacity or in such case the dissolution of the society which appealed for the credit.
- For the missing or reduction of the negotiated warranties from the credit solicitator occurring after the contract is signed.
It’s important to highlight that credit extinction doesn’t implicates losing beneficiary rights and credit use, that’s to say, it wouldn’t be possible to utilize the amount that the Credit Institution or the physical person lendeed in the original credit, there must be a solicitation for a new one.