If you are interested in the Cession of the Fifth it is good to be aware of the legislation. It is very important to know well the chosen product, its characteristics and the law what it imposes for this type of personal loan on a legal level. Let’s look at the different cases point by point together.
Assignment of the Fifth Regulation: in this mini guide, we will try to help you understand how to act on a legal level with the assignment of the fifth, it is also good to know what the obligations of the employer are , and the judicial safeguards .
Assignment of the fifth: judicial framework
In the category of personal loans , the assignment of the fifth is part, in fact we find it framed in the art. 1260 of the Civil Code, which provides for the granting of credit to third parties for consideration or free, for those who are in possession of it.
The transfer of the Fifth is regulated by Presidential Decree number 180 of 5 January 1950, and also by the implementing regulation of Presidential Decree number 895 of 28 July 1950. Within the DRP number 180 there are the laws 311/2005 and 80/2005.
The law allows employees and pensioners to take advantage of the rights on the assignment of the fifth salary or pension.
Assignment of the fifth salary: the obligations of the employer
Another strong point that the law provides for the assignment of the fifth salary is the obligation of the employer . In fact, the employer must necessarily accept the loan application by means of the pay check.
The employer has the task of verifying and ensuring that the value of the monthly payment requested on loan, is not greater than 20% of the net salary, considering family allowances, overtime, and other possible extras.
Delivery and rates
The regulation of the assignment of the fifth establishes that the financing must be provided through the cashier’s (non-transferable) checks made out to the customer or by bank transfer to the bank account of the client who has applied for the loan.
The interest rate and the installment will remain unchanged for the entire duration of the loan (also called amortization).
Regulations for the assignment of the fifth for compulsory insurance
To protect the bank or financial institution that will provide the loan, the law establishes that, together with the signing of the contract for the assignment of the fifth salary, an insurance contract must be signed, so as to offer greater guarantee to the bank or the financial institution .
The insurance contract will also protect the family members of the applicant, in fact if it should happen a pre-eminence , the insurance company will have the obligation to pay the debt to the bank, replacing the deceased person. The insurance institution also has no right of recourse on the deceased’s family.
Assignment of the fifth: what happens in case of termination of employment
Unlike in case of loss of work and difficulty in finding another, the insurance company will initially pay the installments by compensating the value to the bank or the financial institution, but the principal debtor will still remain the holder of the loan and the company will turns to him anyway.
If the borrower should find a new job within 6 months , the bank or the financial institution, will notify the new employer that there is a transfer of the fifth in place, so he will communicate to the new company the installment of the transfer of the fifth in progress, as a result the installment will continue to be retained on the new paycheck. For this case, obviously, the insurance company will not make any intervention.
Double assignment of the fifth of the salary
If you need a value that would be more than 20%, we suggest the double transfer of the fifth salary . The law grants you up to a maximum of 40% of the net salary through the payment of two installments of 20% each.