How do I get out of debt?
It doesn't take too much to fall into debt as a consumer or self-employed entrepreneur. How can you escape this again if you don't even have enough income to live on? There are several ways to get out of debt.
Illness and the subsequent lack of income make it impossible to pay off debts as agreed with the creditors. Even as an entrepreneur it can happen that one is due to unpaid bills or missing orders with their own creditors have to find a solution.
Debt-free through private bankruptcy proceedings
- There is more than one answer to the question of how to get out of debt. On the one hand there is the insolvency procedure in Germany, then the debt settlement and finally the EU insolvency procedure.
- If you are over-indebted as a consumer or self-employed person (insolvent in the long term), there is generally no way around bankruptcy. The usual procedure for private debtors in Germany is the private insolvency procedure, or private insolvency for short.
- A procedure lasting several weeks is followed by a six-year good conduct phase. It will take another three years until you are actually considered debt-free and without an entry at SCHUFA.
How are EU insolvency proceedings assessed?
If you want to discharge your debt not in Germany but in France or England, you can do that. Ideally, you will be debt free in 12 to 18 months. This will save you almost five years. Is there a catch?
In comparison to other EU countries, private bankruptcy proceedings in Germany are very ...
- Basically, the European Insolvency Regulation requires reciprocity from EU states when it comes to the Recognition of foreign personal bankruptcies and their legal consequences, here in the form of the discharge of residual debt, goes.
- Even though lawyers frequently state that bankruptcy proceedings in England pending the issuance of the Experience has shown that the discharge of residual debt is problem-free, but difficulties can arise after your return Pop up. These occur when German creditors have to acknowledge the English (EU) discharge of residual debt.
EU residual debt discharge recognized by the Federal Court of Justice
- Creditors will try to prove to you that the purpose of your stay abroad was solely to get rid of your debts. If that succeeds, a German court will declare the foreign debt relief to be invalid.
- However, the obligee must provide evidence that it is a question of an improper temporary relocation of residence. The case law of the Federal Court of Justice regards the recognition of the EU residual debt discharge as problem-free if there were good reasons for the change of residence.
- Nevertheless: a residual risk remains. Longer and more frequent stays in Germany in particular increase the risk.
- A second problem is that costs of the EU insolvency proceedings. You or the sponsor must not be completely penniless when you move your place of residence. Living in England or France and the debt relief process costs a lot of money.
- If you embark on such an adventure and the residual risk in purchase you should be debt free within 20 to 24 months.
Aim for a debt settlement with creditors
- A voluntary debt comparison offers a way to avoid bankruptcy proceedings and still achieve debt relief. Instead of paying the full amount, you only pay half, a third or just 10 percent.
- Since no bankruptcy proceedings will be opened, you remain free. You can be out of debt after just three months. The result is that entries can be quickly deleted from SCHUFA and the debt register.
- Debt settlement sounds good in principle, but you have to do something about it. You can negotiate a fixed installment payment plan. Or you can get a sponsor who takes over agreed payments to creditors.
If creditors get 30 percent of their total claims reimbursed, they usually continue to consent. Normal creditors can often be put up with as little as 10 percent.
