Debt restructuring for unemployed

Anyone who loses their job inevitably worries about the financial future. This is all the more true when loan contracts have been concluded, the repayment of which then falls during the period of unemployment. In any case, it is more difficult for unemployed people in the market to get a loan. Donors only trust their customers’ financial collateral. Taking out a new loan for debt restructuring often makes things even more complicated. This applies in particular if the old loan has to be serviced at high rates.

Unemployment threatens the debt trap

Unemployment threatens the debt trap

Losing one’s job means that financial losses have to be compensated. This weighs particularly heavily when the economic possibilities have been in the border area anyway. Low-wage earners who have taken out a loan to finance everyday goods or luxury goods are particularly affected.

In the event of unemployment, the overdraft facility is usually used before those concerned consider rescheduling. The problem is that one day the overdraft facility is exhausted. As the loan amount grows monthly due to high interest rates, this can result in economic ruin.

Because banks only offer their services against collateral, debt rescheduling can generally only be realized if the applicant can have a fixed monthly income. Salary and wages are such collateral that is accepted by lenders for the conclusion of a loan agreement. When you lose your job, you lose this security.

Those affected are usually entitled to unemployment benefits. However, lenders do not classify state transfer payments as sufficient security. This applies even if the amount of unemployment benefit is above the average of an employee’s income.

Legally, unemployment benefits are not treated as income. Nor can it be attached by means of foreclosure. Accordingly, the lenders lack any creditworthiness for a new loan, which certainly does not favor the initial situation.

Find the conversation at your own bank

Find the conversation at your own bank

In some cases, a conversation with the house bank is a promising way to start debt restructuring despite unemployment. The advantage is that the bank knows the debtor and his payment behavior.

If he has proven to be a solvent customer in the past, some house banks agree to rescheduling. However, the prerequisite is usually that the unemployment benefit is above average. The lenders then have an interest in granting a new loan because the monthly repayment rates are to be reduced. In addition, the borrower should be able to save an additional financial cushion.

Unemployed people have particularly good chances if they can offer other forms of security in addition to their unemployment benefits. These are, in particular, real estate or a new car. If the unemployed can prove that the lender takes a small risk by issuing a new loan, a positive decision in the interest of the applicant is quite possible.

The possibilities of rescheduling without appropriate collateral

The possibilities of rescheduling without appropriate collateral

If the person concerned cannot offer their house bank valuable collateral and the unemployment benefit is low in comparison, the bank will probably refuse to accept it. In these cases, however, it is possible to commission a credit intermediary.

The intermediaries work with foreign credit institutions, which are often based in Switzerland. But even these lenders do not entirely forego collateral. If the unemployed does not own a property or cannot have a life insurance policy, he must ensure security by other means.

Many foreign banks accept a guarantee in this connection. The prerequisite for this is that the guarantor has proven to be solvent in the past. It is ideal if the surety in turn has to offer additional collateral. However, when using a credit intermediary, it should be taken into account that they will regularly charge fees and a commission.

Before concluding the contract, make sure that the additional costs are not incurred until the mediation has been successfully completed. Otherwise, the unemployed are faced with further liabilities that put additional strain on their financial budget.

The personal loan

The personal loan

If the foreign banks come to the conclusion that the conditions for rescheduling are not met, the unemployed have another option. In recent years, a new type of loan has become increasingly popular, the so-called P2P loan. The request for a loan from the unemployed is directed to a private individual.

If the customer agrees to the loan, he pays the money out to the requester. He is therefore the sole creditor of the borrower. The application can be submitted via a credit portal. The contact between the unemployed and the private individual is thus established through an intermediary.

The intermediary ensures that the repayment is put under permanent observation. In terms of content, the P2P loan generally does not differ from the classic loan contracts. Nevertheless, the person concerned should make sure before signing the contract that all conditions have been recorded in the contract.

With this method, the chances of success of a debt restructuring are particularly high if there are no entries at Credit Bureau. Anyone applying for the personal loan via a credit platform should also pay attention to whether special conditions apply to the mediation. For example, fees or commissions may apply.

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