Monthly Archives: March 2019

How to Live with Unpaid Debts?


In the era of consumerism, lack of money does not have to be a problem. The availability of loans and credits for any purpose is huge. And not just when we suddenly need an extra injection of cash. Thanks to social media and effective marketing, the proposals to take advantageous loans are offered to clients at every step. Easy availability of credit, where the verification of creditworthiness is minimal or there are no requirements as to how to provide them, makes them more and more willing to use them. Unfortunately, many times the debt incurred turns out to be difficult to pay off. Too high loan installments, unpredictable random situations, financial problems, attempts to pay off debts with another loan, can make us fall into huge debts, which over time become unpaid.

Do not avoid the problem

In a situation when we reach the point when debt in our eyes becomes unpaid, one should not avoid the problem. The worst possible solution is surrendering and stop paying back the arrears. Avoiding calls from debt collection agencies and calls for payment can only be effective for a while. In this way, we will not avoid the consequences. The matter will soon go to the court and to the bailiff. This, in turn, is associated with court fees and bailiffs, which additionally burden us. In this way, our debt will grow very fast, which will only worsen our financial situation.

Search for solutions

In a situation when the debt collection company takes over the debt collection company, it is worth undertaking an attempt at a dialogue. Debt collection agencies have detailed information on the title of the debt and its amount. So let’s just talk to a representative what can result in finding a way to solve a difficult situation. A debt collection company can help in debt repayment, among others, by spreading the debt into smaller installments, extending its repayment time slightly or discontinuing interest on late repayment of installments. There may also be situations when the company resigns from the recovery of part of the debt, so it is worth undertaking an attempt at dialogue and negotiations.

Also in a situation when the issue of debt goes to court and bailiff it is worth looking for a solution to a difficult financial situation. There is a possibility to submit an application for the mediator in the court. The mediator can help the parties to the conflict, and thus the debtor and the creditor, find an effective debt repayment solution. However, if the debt is taken over by the bailiff, the debt collection agency should be contacted immediately. Debtor as a creditor has the opportunity to submit an application to suspend bailiffs’ execution. The condition for this is to make a declaration on due repayment of debt.

Do not pay off debts with new ones

Do not pay off debts with new ones

A frequent solution for debts becomes a new loan to repay the previous one. Easy access to all types of loans results in debtors holding up to a dozen or so credits from various titles. It is a solution that gives the illusion of leaving a difficult situation. Unfortunately, in this way, our debt is rising. A so-called debt spiral is created, which is very difficult to break. Therefore, it should not be continued under any circumstances. The solution in this situation may be a consolidation loan. I am interested in the topic, can the bailiff take a wife’s account for the husband’s debts? 

Consolidation loan

Consolidation loan

The consolidation loan allows you to combine all the liabilities incurred into one. The bank granting the consolidation loan takes over all our existing loans, sums up their common value, and then proposes interest rates and installments that are adjusted to our financial situation. Our creditworthiness is also assessed. This solution is beneficial for people with high indebtedness who have fallen into a spiral of debt. Despite the high level of indebtedness, there is a good chance that the bank will consider the loan consolidation application positively. Then, a common, lower interest rate on credits will be calculated. Its amount will depend, however, on the type of debts and the repayment period. Usually, the bank offers a much longer time to settle the debt. In this way, it is possible to slow down, but to effectively recover from debt. It should be remembered that a consolidation loan is not contrary to appearances cheaper loans, because despite the lower amount of installments, the repayment period is extended.

A permanent source of income

Being in a difficult financial situation, the lack of a permanent source of income will only make the situation worse. The above-mentioned ways to get out of a huge amount of debts will only be effective if we provide ourselves with an inflow of funds. It’s worth taking a look at a well-paid job. Additional work should also be considered outside full-time regular work. In a situation where we have such an opportunity it is worth going abroad for a while, thanks to which we will get a higher income. A permanent source of income will allow not only to stabilize the monthly budget, but also for regular repayment of obligations.



Debt restructuring despite negative private credit

What is a debt restructuring? Basically, this is nothing but converting a short-term loan and high monthly installments into a long-term loan at lower rates. This loan amount is used exclusively to replace the old loan. For goods purchases, he is not really intended. How does it look if the credit check is negative? Is there a rescheduling despite negative private credit?

What is the credit rating?

The ability to pay influences the creditworthiness of a bank customer. In the past, if an invoice was not paid on time or if there are still outstanding receivables, then this is a negative feature in the private credit, from which point on a loan commitment from a bank has become very unlikely. It is better not to let the case happen at all. But once the child has fallen into the well, there are still possible solutions.

Credit Providers

Credit Providers

On the Internet, some credit intermediaries, who offer a rescheduling despite negative private credit. In the background are lesser-known banks, which in some circumstances are ready to reschedule. In general, one should ask oneself, how high the monthly rates should be, so that one comes without problems over the rounds. It would be counterproductive if one chooses too high installment payments and can not pay afterwards.

That requires a regular income. Without a permanent job rescheduling is not possible despite negative private credit. Self-employed and freelancers have a debt rescheduling even harder because their income is relatively uncertain. In contrast to employees subject to social security contributions, they do not have a regular monthly cash receipt. That makes the matter more difficult.

Anyone who hires a credit intermediary, should pay attention to the seriousness. If he asks in advance for any fees, then it is called away. Credit intermediaries only get a commission on successful conclusion of a contract. This is paid by the borrower and in most cases this is credited to the loan amount.

Personal loans

Personal loans

A typical feature of a personal loan is that private financiers are in the background. Normally, people who need a loan to buy consumer goods, to finance holidays or to study meet there. However, it is not uncommon to apply for a loan for a debt restructuring despite negative private credit. Whether this is successful depends on the respective lenders. At this point, it should be mentioned that the loan amount is composed of the funds of several lenders.

One more word about the handling fees

The BGH has decided that processing fees for loans are now inadmissible. But that should not obscure the fact that this applies only to loans in Germany. Anyone planning a rescheduling despite negative private credit abroad, must expect processing fees and can not take legal action against it. However, if you have to turn to a bank for lending abroad, you are welcome to accept it. That’s still better than having to do without money.

Who pays attention to his creditworthiness, does not need to fear negative entries in the private credit. This means that the bills are always paid on time. The monthly installment for a loan should always be paid on time. In addition, you should not burden yourself with too many installments, then you do not need to take out a loan.

Collateralized Debt Obligation, Definition and Risks

What is Collateralized Debt Obligation?

A Collateralized Debt Obligation (also known as CDO ) is virtually a debt obligation, with the latter exercising the collateral security role. A CDO consists of hundreds or tens of ABS bonds, which in turn are guaranteed by a large number of individual debts. Collateralized Debt Obligation is considered one of the primary causes that led to the crisis of subprime securities.

The reimbursement of CDOs is not based on the liquidation of assets by the issuing company or on the income prospects of a given company, but only and exclusively from a set of underlying bonds that are defined, in fact collateral and which identify a financial or real asset. which guarantees the timely payment of a debt.

In the case of a Collateralized Debt Obligation, the company issuing the security does not issue bonds to finance investment plans, since it does not perform a real economic activity but rather consists of buying and holding a portfolio consisting of ABS bonds and their any tranches.

CDO Risks

The latter are usually cataloged according to the risk that their underlying assets represent. After proceeding with the purchase of the bond portfolio, the issuing company transforms it into a Collateralized Debt Obligation and then transfers it to a company established specifically for its detention and defined SPV ( Special Purpose Vehicle ), which in turn provides for the division of ABS bonds in several tranches and giving higher priority to the senior CDO ones.

Collateralized Debt Obligations are an advantage for the issuer, since they are a tool that can contain many small parts of low or medium quality debt and make them a unique, high quality instrument. This factor is made possible by the massive diversification that is carried out within the CDO bond portfolio, which, as in many other situations, considerably reduces the risk deriving from possible insolvencies.

Precisely because of its lower riskiness, a CDO stock can be more easily placed in a financial market than the single underlying bonds, which, on their own, may not be very liquid. ABS investors prior to the creation of CDOs were likely to buy the risky senior, while the banks in their portfolios held the junior ABS, more risky but also more profitable for this.

This senior-junior subdivision left many free and non-held mezzanine ABSs and one of the reasons that led to the creation of CDOs was precisely to make this particular tranche of ABS more attractive on the market. The rating of CDOs containing ABS is usually very high, precisely because it allows the issue of senior tranches that previously would not have been possible to create.