The concept of debt restructuring is wrongly biased. That’s because it contains the word “guilt”. Debt is also a negative thing. However, a good distinction should be made between debt and liabilities.
Re-debts of liabilities
It is a common practice that the consumer replaces expensive loans for cheap ones. This means that he gets a low-interest loan from a lender and with the money paid off the older and more expensive credit early repay. For example, in the repayment phase of a real estate financing is rescheduled several times. Parallel to the normal installment, money is saved in a home savings or similar model. After a certain period of time, a very favorable home savings loan can be granted to replace or reduce the residual financing of the house. This usually saves many thousands of euros. According to the same principle, normal personal loans can also be triggered prematurely. However, debt restructuring can only be considered if a new loan is taken out for the replacement of one loan.
Debt repayment by debt rescheduling
Unfortunately, it often happens that the liabilities can no longer be serviced. In this case, liabilities become liabilities. Having debts is the worst nightmare that many people can experience. And unfortunately too often people are overindebted. Then threatened by legal dunning, bailiffs, foreclosures or even the bankruptcy.
To avert this inconvenience, a lender, whether private or bank, can provide a debt rescheduling loan. This allows very good negotiations with the creditors. The chances of an out-of-court settlement are rising very strongly. If one has then agreed with the creditors, the debt will be offset with the debt rescheduling and the consumer has again only liabilities. It is very important that no creditor is forgotten.
However, these debt rescheduling loans also carry a high level of risk. Since there is an increased likelihood of default, lenders can afford to pay this risk dearly. Interest near 10 percent or even above is not uncommon. Nevertheless, you only have to deal with a business partner and save yourself very high enforcement costs.
The debt restructuring is thus often an effective way to get the one hand, money, and secondly to avoid trouble with creditors. In both cases, a very intensive cost-benefit calculation is absolutely necessary.