It is common practice nowadays that consumer goods are financed by means of loans and not from savings. A large number of borrowers choose long-term loans to have affordable rates.
However, this often means that old loans are still running while new loans are to be taken up again. As a result, many borrowers not only have one installment loan, but two, three, four or more loans to run in parallel. Not only can you lose track of things, but you can also run into financial problems if at some point the income is no longer sufficient to meet all obligations in accordance with the contract, especially if there are negative changes in the income situation due to unemployment or divorce.
Combine debt with a debt for debt restructuring
A debt rescheduling loan makes it possible to combine several current loan obligations into one loan and to reduce the overall monthly burden by choosing a correspondingly long term. As long as borrowers are not over-indebted and have so far regularly met their obligations, debt rescheduling can be the perfect solution. Some banks offer special debt rescheduling loans and the service that they take on all the formalities related to the redemption of existing loans for the customer.
How best to proceed with debt restructuring
First, borrowers must ask the lenders about the transfer fees for the current loans. It can also be worthwhile to compensate for the overdraft facility if it is deep in the red. The transfer sums must then be added together and the sum amounts to the amount to be requested as a new loan. If you choose the longest possible term, you may not be able to save on credit costs, but the total monthly charge will be significantly lower, so that it is still guaranteed that the installments can be paid.
The result should at least be such that the new rate is significantly lower than the total amount for the previous rates. If the financial situation is otherwise orderly and the Credit bureau information is faultless, nothing should stand in the way of a loan for debt restructuring.
When borrowers are already over-indebted
A debt rescheduling loan becomes a little more problematic when borrowers are already over-indebted. This is always the case when the monthly income is no longer sufficient to cover the cost of living and the current installments. Especially if the lender has already canceled loans as a result of financial problems, a loan for debt rescheduling is usually useless because other banks are unwilling to take the high risk of default.
In addition, in the event of over-indebtedness, it is usually not the best solution to simply reschedule existing loans. If you then desperately get involved with credit intermediaries who promise credit even in difficult cases, you may be making a serious mistake. If anything, the loan for debt rescheduling becomes exorbitantly expensive or no loan comes about, but you have a new home savings contract and / or life insurance. In any case, caution is advised here. If banks are unwilling to grant another loan to indebted consumers, it makes most sense to turn to debt counseling and get help from there. Debt advisers are professionals and also contact creditors to find solutions.
Instead of a loan for debt rescheduling, however, often only private bankruptcy remains. It is often the only way to get rid of your debts legally. The way to get there, however, is no easy task; it requires a six-year behavioral phase that has to be lived through first. At the end of the good behavior phase, the residual debt relief beckons, paving the way for a debt-free life.