Are you familiar with the term "payment in kind"? This form of debt settlement can be an alternative to other methods, as it does not require a legal process.

In payment in kind, the parties involved in a debt, that is, the creditor and the debtor, reach a consensus on how the debt can be settled, without having to do so in the conventional way, that is, without being in cash.

Learn all about payment in kind in this article from Lawyers in Braga. 

What is payment in kind?

Payment in kind, also called payment in kind, is an agreement made between creditor and debtor, where there is consensus on the amounts to be paid by the debtor to the creditor. 

What is a payment in kind?

A payment in lieu of performance It is the same as a payment in kind, where the method of payment to the debtor is agreed upon, should the debtor be unable to pay in the initially stipulated manner. 

How does payment in kind work?

Payment in kind occurs when a debtor is unable to pay the debt in the stipulated manner. In other words, a debtor may not be able to extinguish the debt through payment in cash, but may agree with the creditor that this payment can be made in kind. debt to be paid with something you own. 

In the case of payment in kind, is there a right of first refusal?

Yes. In the case of payment in kind, there is a right of first refusal. For example, in lease agreements, payment in kind is possible when the property has been leased for more than two years. 

The right of first refusal essentially applies when dealing with real estate, whether apartments or buildings, for rent or sale. 

What types of goods can be given as payment?

Movable or immovable property is included among the assets to be seized. For example, movable property includes cars, and immovable property includes houses or land. 

Difference between payment in kind and other forms of debt settlement.

Besides payment in kind as a way to settle a debt, there are other methods that can be adopted. seizure of bank accounts It is a way of making a person pay a debt by withdrawing money from that person's bank account. 

Another way is to wage garnishment, This refers to the garnishment of a portion of a person's salary in order to settle a debt. 

What are the advantages of payment in kind?

It is worth highlighting some advantages of payment in kind, such as: 

• Speed in resolving the debt with the creditor;
• In a settlement agreement, legal costs can be avoided, since an enforcement action is not necessary;
• In real estate appraisal situations, the appraisal may be more beneficial to the creditor, since it is real estate experts who assess the property's value, and the market may be favorable to a good price, rather than the court setting the price of the house. 

What are the disadvantages and risks of payment in kind?

Regarding disadvantages, there are some, specifically concerning real estate. 

If it's a new property, transferring it to a real estate agency or similar transaction can negatively impact the property's value and involve a longer waiting time. 

What is the legislation regarding payment in kind in Portugal?

O decree-law no. 125/96, of August 10 This article focuses on payment in kind in Portugal. It outlines the ideal way to settle a debt, how payment in kind can be requested, and the circumstances under which it occurs. 

Payment in kind under the Civil Code

In the civil code, payment in kind is clearly defined. This document contains the rules related to payment in kind. When to pay, how to pay, and how to initiate a payment in kind process are some of the issues addressed in various articles, such as... Article 837 of the Civil Code. 

How do I formalize a payment-in-kind agreement?

A deed of payment in kind is the document that formalizes the agreement. This document contains information such as the amount to be allocated for the payment of the debt.

The deed is drawn up and signed at a notary's office, but steps such as issuing the IMT (Property Transfer Tax) and stamp duty payment slips (in the case of real estate) are completed beforehand. 

How can a lawyer assist in a dation in payment?

In the case of a payment in kind, a lawyer can be very important. A legal professional is the most suitable person to advise and assist in the payment in kind process, from proposing this option to helping their client put it into practice.

No lawyers in Braga It has specialized professionals, ready to provide the best assistance and, above all, to protect your rights. 

Conclusion 

A payment in kind or payment in fulfillment is a way for a debtor and a creditor to reach an agreement on... payment of a debt.

In a debt settlement, a person can settle their debt by transferring assets, such as real estate. This debt settlement option has several advantages, including low costs and speed, since it does not require going through the judicial process. 

For a payment in kind to be properly formalized, a deed of payment in kind must be drawn up at a notary's office.