Debt relief is a contract between the creditor and the debtor that leads to the partial or total extinction of the debt involved.
Debt forgiveness is the most radical redevelopment measure for borrowers in the crisis; the intended effect, however, is highly controversial and has not always occurred.
Pecuniary claims are often only part of a contract. When the legislature speaks of “guilt,” a whole variety of obligations may be meant. For example, anyone who rents a car not only has to pay rent and expenses, but also has to use the vehicle properly and in compliance with the law. Leaving the 16-year-old son behind the wheel violates the contract regardless of the financial obligations.
At this point, however, it is all about monetary claims: a creditor has delivered goods, provided a service or granted a loan. The obligation of the debtor is now to provide payments in the agreed amount and at the agreed times.
Terms such as “debt relief” or “depreciation” have found their way into everyday language. At times we encounter the expectation that business people somehow record their debts and undo their debts. However, this is a misconception: Losses reduce the profits of companies and are generally passed on to the whole of the customers by means of a surcharge.
From the point of view of the general public, unpaid obligations are therefore extremely unpleasant and therefore the law represents a clear line: the debtor is obliged to pay back, without any ifs or buts.
Debt relief out of court
In the normal case, the obligation expires with the fact that the service owed is provided. In the case outlined here, the repayment of a sum of money is meant. If the financial situation of a debtor is permanently hopeless, debtors and creditors can agree on a remission contract. In this case, the debtor only has to repay a part or nothing at all. It is interesting that the one-sided waiver by the creditor is not enough. Even a remission contract is two-sided.
Judicial debt forgiveness
If the possibilities of an out-of-court Debt Settlement are exhausted, there is also the remainder of the exemption in the context of judicial insolvency proceedings. The conditions leave little room for maneuver, which is why we – if possible – on behalf of our clients for an extrajudicial way. The procedure provides for a good conduct phase in which the debtor must not be guilty of any wrongdoing, otherwise the insolvency proceedings will be terminated and the debtor can only start a new procedure after 10 years. Debts incurred within this time are not subject to the discharge of residual debt.
When debtors admit their financial situation, the distress is usually already great. Debt settlement works like liberation. But once signed contracts cannot be undone: the debt must be tackled so that the future is debt-free again.
Negotiate with the creditors for a settlement
In order to avoid consumer insolvency proceedings, all creditors must be contacted. This task is performed by the debtor advisor with the aim of obtaining a debt relief for his client. He offers partial payments and lower rates to cover the debts. Often, creditors agree to an out-of-court settlement of debts, because then there is the prospect of getting at least part of the money. If there is nothing to be obtained from the debtor anyway, the debt relief can also apply to the entire debt, since the creditor is in any case in a loss of money. However, if only one creditor does not agree to a settlement, this path is built from the debt. The judicial insolvency procedure is then inevitable.
