Escaping the debt trap seems to be an endless headache in our country. Very difficult to stop after the ball starts rolling. Do you have too many invoices and you don’t know where to start? There is a simple solution on how you can get out of debt without being ashamed.
Without judging, we will suggest that you get out of debt. You don’t have to do anything.
What is overindebtedness?
From the moment someone has to pay an invoice that is considered late, we speak of debt. This need not be.
Over-indebtedness only arises when several debts accumulate and you can no longer pay outstanding bills. Then the vicious cycle of over-indebtedness usually begins.
What can you do in the event of over-indebtedness?
Over-indebtedness is a taboo subject, but it affects many people in Switzerland. It is perfectly possible to get out of the debt trap, but there are a few important tips and tricks that you should use to make sure you have every chance on your side.
- Create a detailed budgetThis first step may seem obvious, but creating and checking a budget is essential. There are several points that are often forgotten or neglected when creating a budget, such as unforeseen events (traffic buses, additional telephone charges, etc.) and these events should not fall into the same category as “pocket money”. It is important to set aside a certain amount for the unforeseen.
- Set priorities for ongoing billsTo most effectively get the rolling ball to a stop, you must first pay all of your current bills and prioritize health insurance, as they almost never negotiate possible payment plans. Once your current bills have been paid, you can start paying your late bills without worrying about new debts.
- To ask for helpIt is often not easy to find courage and ask for help. But it is very important not to be alone in the event of over-indebtedness and to have someone at your side who prevents you from being drawn into the vicious circle of debt. Talking about it with family and friends is a good place to start. Even if they cannot help you financially or administratively, moral support is extremely important. It’s like going to the gym: you can train alone, but it is often easier to make progress if you go out regularly with friends. Turning to a professional debt relief institution is a security solution.
What should be avoided in the event of over-indebtedness?
Avoid consumer credit and credit cards. Often people with financial difficulties take out a “small loan” to pay their arrears because they think that once the outstanding bills are paid, everything will be a thing of the past and that this is the right way to go. The main problem with this approach is that the loan is unfortunately not in vain. The monthly repayment rate consists of a more or less high amount, which is adorned with interest and must be added to a budget. As a result, a person who has already accumulated debt and debt collection on a budget with no monthly installments will have much more difficulty in not taking on new debt as they now have to make additional monthly payments. It is impossible to get a new loan with more than one debt collection anyway.
What is debt restructuring?
Debt restructuring is professional support offered by several institutions in Switzerland.
This includes a debt balance, a summary of the financial situation and the creation of a budget to determine the amount that can be transferred to the lender each month for debt repayment.
This stops the snowball effect and you can then live a quiet life again without the daily pressure of your various lenders.
What are the requirements for debt restructuring?
As long as you have no garnishment, debt restructuring is possible.
Lenders refuse to negotiate as soon as wages are seized because they are in an advanced stage of enforcement.
The advantages of debt restructuring:
The benefits of debt restructuring are many. Here are the most important ones:
- No more arguments with your lenders and save a lot of time for your private life.
- Receive no reminders from your lenders. Everything is managed by the consultants.
- The debt enforcement will be discontinued.
- Personal advice from professionals who help manage a budget to avoid the spiral of debt.
- A stronger negotiating position and professional experience in this area, which make it easier to find the best arguments.
- Clarity and no more nasty surprises with the bills.
How long does debt restructuring take?
This depends very much on the financial situation of the person in debt, their solvency and the goodwill of their lenders. The repayment period can be set at the time the recovery plan is drawn up, but there are many unpredictable factors such as changes in the financial situation, new payment arrears or health risks, making it practically impossible to determine an exact duration.
Reduce the amount of debt?
In certain cases it is possible to reduce the amount of the debt. Most of the cases are loss coupons, as these apply primarily to unencountable persons. The lender may then be able to accept renegotiation of the total amount of the debt. The advantage is, of course, that the amount owed is reduced, but at the same time it is required that the total amount be repaid in one go.
The initiation of such a debt reduction process is very complicated and it is easy to get lost in these processes. It is therefore advisable to commission specialists to initiate and carry out this procedure.