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Due Diligence - NPL and UTP Portfolios

Our Due Diligence Report allows you to carry out an early analysis of the entire batch or an appropriate subset thereof, with appropriate insights into the availability of parties and their sources of income.

This processing brings concrete advantages both when buying and selling portfolios and when analysing stocks of loans already acquired.

Difference between UTP and NPL

NPLs (Non-Performing Loans) or Degraded Credits are those receivables whose collection has become uncertain. Debtors, due to a deterioration of their financial situation, are not able to meet their obligations and, therefore, repay their debt within the scheduled time or in the agreed amount. In the event of insolvency, in particularly serious situations, these are bad debts.

In general, what is different is the situation of the debtor. In the case ofUTP (Unlikely To Pay), he/she is in a situation of temporary difficulty so could potentially return to performing. In the case of NPLs, however, he/she is at that point considered permanently insolvent.

When we talk about bad debts, it is clear that the main approach will be that of recovery, so the sale of portfolios becomes the most viable solution. The case of UTPs is different. Given the best situation, in a hypothetical sale, they will be offered at a much higher selling price than a portfolio of bad debts.

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