Take out a loan for debt restructuringOn December 18, 2019 by admin
Over-indebted consumers ward off personal bankruptcy with the help of debt restructuring. Overindebtedness exists if the income is not sufficient to cover one’s livelihood and to settle the liabilities incurred, so that new loans have to be taken out to pay old debts.
The extension of loan terms as a central means of debt restructuring
Consumers take out a loan for debt restructuring in order to be able to pay the loan installments from current income in the future. For this reason, a reduction in credit rates is necessary, which is primarily due to an extended loan term compared to the current state. It is also desirable that the new loan for the debt restructuring be associated with a lower interest rate than the previous loan. In order to obtain a favorable interest rate, the applicant compares several offers for a loan to reorganize his financial situation.
The lender does not transfer a loan for the debt restructuring to the current account of the loan applicant, but settles the specified liabilities directly. This effectively prevents the borrower from actually taking out an additional loan contrary to the expressed desire for debt restructuring. In a few cases, the new lender will not be able to clear the account with the previous creditor, as the latter does not allow transfers by a third party.
Only in this exceptional case will the lender transfer the corresponding partial amount to the restructuring loan customer and request confirmation of the transfer of the money. Before concluding a contract, loan customers make sure that the loan broker offering the debt restructuring does not charge any upfront costs.
Include all previous debts or allow exceptions?
In addition to saving money, the loan for debt restructuring has the further advantage that the consumer only has to transfer a rate to a single creditor. In a few cases, however, it makes sense not to include individual existing liabilities in the restructuring concept.
This is especially true for interest-free installment payments, but also for most car loans, since the current interest rate for special loans is usually cheaper than the interest on the new loan. When planning the financial situation, consumers, together with the debt restructuring company, ensure that they also have to pay the installments for liabilities that are not part of the redemption and choose a sufficiently long term for the restructuring loan.