If people live beyond their means, it can quickly end up in a debt spiral. People can no longer pay their debts or have to pay for them for a very long time. But also blows of fate can lead to a big mountain of debt. This can be a divorce, but even the construction of a house can quickly lead to ruin. Only living conditions have to change so that existing loans can not be paid back.
Especially for those affected this is a very stressful way. It does not help to just keep your eyes closed and not open the post. Because at some point the bailiff is at the door and seizes all the objects that are in the house. Furthermore, the interest continues to run and the dunning fees also. So the mountain of debt is rising steadily. Even so, a possible house financing is on the loose and the dream of home is gone, if not countered in time.
Opportunities for debt restructuring
It is much more important to look ahead and look for solutions. It should be as soon as possible, a debt advice center to be visited. This knows ways and means. As a result, the debt restructuring can be started.
First, all creditors should be listed. The debt counselor can thus advise the creditors and possible solutions. These can be debt forgiveness or an extension of the repayment period. But even the release of interest on large amounts can be very relieving.
Thus, the creditor takes no profit, but he also loses no money. The risk in financing is well known and is included in the interest. You may also be talking about a payment break until a new job is found.
The only important thing is that the believer seeks contact. These are often happy that they have been informed about the problem and can work together to find a solution. The good thing is that with a debt regulation, no new interest will be charged and any dunning fees will be canceled. This will not cause any further debts.
Which alternatives are there?
Even friends and relatives may be able to help in an emergency. This relieves pressure and allows the debt to be settled as needed.
Can also help a loan from abroad, in which all debts are bundled. As a result, first open accounts can be settled and the debtor has only one creditor. The advantage is that foreign banks do not have access to Credit bureau data in Germany. To get to foreign banks, the customer needs an intermediary. This manages the connection between the customer in Germany and the bank abroad.
Of course, the banks are demanding collateral, of course. A regular income or valuables such as a car are beneficial. Even a citizen can provide the necessary security here. The citizen carries the risk in case of default of the loan. It is understandable that also no foreign bank gives someone a loan of 100.000 €, if this has only 1000 € in the month of income. Also, these banks do not lend so high loans, as they shy away from the risk of default.
The borrower should be aware that lending rates can vary significantly. A comparison in a comparison portal can be helpful here. It should be mentioned, however, that not all banks are listed in a comparison portal. Some do not want to appear in the comparison portal. Here it is worthwhile to search further and to pay attention to advertising.
Another option is to raise money through a private lending platform. In doing so, the borrower has to introduce his project in more detail and must also disclose everything. Also, the borrower must have available collateral. The private financiers can then decide if they want to invest their money here.
Everybody can get into the debt trap. It is important to recognize this in good time and to seek professional help. The faster it trades, the faster the further increase in debt can be prevented.
5 tips for debt restructuring
1. Create a comprehensive list
In the first place, a comprehensive list of all liabilities should be prepared. It is advisable to note the name of the creditor, the amount owed and a note of any installment payments. The total can then be determined at the end of the list. What appears at first glance to be a matter of course, is not tackled by many people.
This will eventually lose the overview and incoming letters and reminders can not even be assigned. So first of all, order in chaos must be created to begin a meaningful debt restructuring. An overview of installments can also be guaranteed.
2. Work up finances
A key point in debt recovery is knowing your finances. This raises the question of what are in the month for revenue in the room and what expenses incurred. Only when these figures are clearly set can a debt reduction be considered. From an appropriately formulated overview, it becomes clear how much money is actually still available for paying off the total amount.
If this value is not known, installments that are too high can easily go beyond the budget and lead to further additional costs. Therefore analyze instead of making false promises.
3. The smallest ones first
It is often said that when paying off debts, the big positions have to be redeemed first. But this is a fallacy and a momentous mistake. As all of the available money begins to be put into the high credits, interest rates continue to rise in small positions, increasing costs.
In the end, although you have paid a sum, but again created new positions with high payment requirements. Thus, further long-term payments must be arranged. Therefore, the items that can be settled with one payment or in two or three installments should be paid first.
4. Not more than three at the same time
If, after all deductions, there is still enough money left, several installments can be sought at once. The faster the debt is reduced, the lower the interest rates. However, it should never be more than three payments at a time to have enough room left. Moreover, not all payments are limited to the smallest or highest positions.
If you want to pay more anyway, you should mix everything well and choose a small, medium and high amount. This has, above all, a psychological effect, because the smallest sum paid, this shows a progress, which significantly increases the motivation.
5. Set priorities
For example, if there are tax debts in the room, then it is important to settle these first, because this can have harsh consequences for you. The same is true for debts at government offices or other state institutions. These are to settle in each case first. In addition, all completed contracts should be scrutinized. The question is in the room, where can costs be reduced.
The more money can be saved in one place, the more is available for repayment and it may possibly still reserves are formed. Also, credit card statements should always be paid first, because here not only high interest in case of default may be in the room, but also the blocking of the cards is possible at any time.