A salary- or pension-backed loan is a particular type of loan paid back through direct salary or pension withholdings of up to one fifth of said emolument calculated net of withholding taxes.
This Italian form of consumer credit was introduced in the post-war period to facilitate access to credit by government employees at a time when the country was suffering the aftermath of the war. Following regulatory changes introduced by Law 80/2005, it was extended to private employees and pensioners, significantly expanding the potential pool of applicants.
This loan form is Italy’s response to subprime credit, being a form of credit accessible to everyone, including bad payers, since it is guaranteed by their salary or pension. Those who resort to this type of loan may have had credit problems, be bad payers, or have already committed themselves financially, and have no other form of financing open to them.
Lawyers have at their disposal the possibility of seizing one fifth of a salary or pension: with this executive, non-voluntary procedure, lawyers are entitled to one fifth of a salary or pension, exactly as in the case of the salary- or pension-backed loan. This tool makes it possible to collect a customer’s debt with a private citizen: entrusting a specialised company with tracking a debtor’s workplace or pension information makes for a fast and cost-effective debt collection operation.
Italian Legislative Decree No. 83 of 27/6/2015, amending the Code of Civil Procedure, also states that “Sums due in respect of a pension cannot be seized to an amount exceeding the monthly social security allowance, increased by half; any amount in excess of that amount shall be seized within the limits laid down in the third, fourth and fifth subparagraphs and in special provisions of law. Sums due in respect of a salary, wage or other income allowance may be seized, to an amount in excess of three times the social security allowance, when the payment is made on a date prior to the seizure.”