The myth of disappearing debt: Why deleting a fintech app will not erase a loan

Deleting a lending app will not make a digital debt disappear. In Argentina, accepting a loan through a mobile phone creates a formal contract between the lender and the borrower, even when there is no pen-and-paper signature, notary or handshake.

The speed and convenience of digital credit can obscure the obligations behind the transaction. The same financial conditions that apply to other agreements remain in force, with a regulator overseeing the arrangement.

Digital wallets that lend through their platforms are regulated by the Central Bank of the Argentine Republic, known as the BCRA. They must report each loan to the Central Debtors database. If a borrower falls behind and cannot meet the monthly installments, the default appears in that record.

That status can make it impossible to obtain other credit in the formal financial system. If the debt remains unpaid, the borrower’s case may be referred to a collection agency or become the subject of a lawsuit, because a digital debt has the same essential features as a bank loan.

The Central Debtors database consolidates financing granted by financial institutions, financial trusts, nonfinancial issuers of credit or purchase cards, other nonfinancial credit providers, mutual guarantee companies and public guarantee funds. The article’s central warning is direct: uninstalling the application does not undo the loan contract.