What is credit and debt
Paying debts with credit - does it make sense?
Paying debts by rescheduling with a new loan is smart, isn't it?
According to the Debt Atlas, 6.8 million people in Germany are over-indebted. Nevertheless, the number of consumer credits is increasing, as the consumer credit index also determines.
Often several liabilities have to be met. It seems like a good idea to use a new loan to pay off old debts.
Debt is no longer a taboo
Loans are often taken out for small things as well, not just for a house or a car.
Debts for the new mobile phone or the longed-for vacation are quickly made.
Getting into debt is now "socially acceptable" and it is also too tempting: Specialist stores and online retailers offer cheap financing, often with zero percent interest to repay the debt.
The customer often forgets that he is concluding a loan agreement with the bank.
Further offers from the bank flutter into the house, which are then no longer interest-free.
Whoever accesses this too often often ends up in the debt trap. Sudden unemployment, illness or divorce are common causes of over-indebtedness.
Is debt rescheduling the way out of the over-indebtedness spiral?
According to the consumer credit index, around 4.17 million people in Germany are currently in a permanent spiral of excessive indebtedness. Many consumers who are trapped in debt want to try debt restructuring.
The idea: You save further costs for the creditors, you only have to pay your debts to one address and you also reduce the installment burden. The first course usually leads to the bank at the same time. But in reality it usually looks different. Therefore, the way to debt counseling is usually the better one.
Paying Debt With A Loan: What Are The Benefits?
The bank advisor works in the interests of the bank, not the interests of the consumer. That is, the consumer does not get the rescheduling loan because the bank advisor wants to do him a favor.
The interest that accrues and the commission for a residual debt insurance go exclusively to the bank. It makes a profit with consumers.
Debt rescheduling can therefore make sense, e.g. if the old loans were taken out at a time when the interest rate was higher and have a longer term.
However, the trap here is: how much is the bottom line actually saved? That is why it pays to seek out an experienced debt counselor. This will be able to show further ways out of debt.
Why do I need good debt counseling?
Without good debt advice, many consumers often fall into typical debt repaying traps. Because whether a rescheduling is really worthwhile must always be calculated on a case-by-case basis. Since many factors and also notice periods play a role here, one should leave this to an experienced debt counselor.
A debt counselor negotiates a debt reduction with the creditors. This is important because it is often forgotten that debt rescheduling only makes sense under one condition: The reduction in debt must be high enough and high enough to cover the interest on the new loan. This is the only way to pay debts with a new loan.
Getting creditors to forego part of their claim is not easy. This requires a professional with a lot of experience and negotiating skills.
What other options do I have to pay off debts?
Consumers can also discuss with the debt counselor whether there are other ways to pay off the debt. It doesn't always have to be the credit.
Sometimes a deferral of the claim helps. Debtors and creditors then agree to postpone the due date of the claim beyond a certain point in time. This is useful if the debtor is temporarily unable to pay his debts, but is able to do so later.
Payment in installments can also be considered. The creditor agrees with the debtor that he will transfer small amounts over a longer period of time. An installment is made up of the repayment of the debt and the further accruing interest.
A settlement payment is also possible. Here the total debts are only partially paid. The debtor has to pay the contractually agreed amount of his debts by a certain date. The remaining amount will be waived.
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