Debt despite negative Credit Bureau
Debt restructuring is the replacement of existing creditors by a new lender. In most cases, several existing loans are combined into one new loan. Debt restructuring is also when a single loan is replaced by a new loan.
The aim of debt restructuring is to replace expensive loans with cheap loans while at the same time providing lower monthly loan installments. In severe financial emergencies, debt rescheduling also makes sense if it leads to lower monthly installments, but does not actually result in interest savings.
In such cases, rescheduling is not always necessary, as many credit institutions are willing to extend the loan term. A negative Credit Bureau makes debt restructuring difficult, but it does not necessarily make it impossible.
Not every negative entry weighs the same weight
Credit Bureau differentiates between hard and soft negative features. Debting despite a negative Credit Bureau is possible at several banks, provided that the negative entries are soft characteristics. This applies in particular if a negative characteristic was forfeited a long time ago and the financial situation of the debtor has changed demonstrably in the meantime.
Often a negative entry comes from unemployment that has now been overcome, so that the borrower can once again prove a fixed income. Approval of debt restructuring despite a negative Credit Bureau is more likely to be expected from a personal conversation in the bank branch than from submitting a loan application online.
This is because the automated processing of loan applications made online hardly permits special case decisions. In addition, the convincing personal appearance when talking to the bank advisor improves the creditworthiness. For more serious or promptly forfeited Credit Bureau entries, the advice of a debtor is available.
If the employee of the advice center gains a positive impression of the client’s willingness to pay back and acts for the bank, smaller regional banks in particular approve the debt rescheduling. Alternatively, there is the option to provide a guarantor with an impeccable Credit Bureau and a fixed income for the debt rescheduling despite negative Credit Bureau entries.
Securing the bank that a debt restructuring is really taking place
In the event of a debt rescheduling, the bank needs certainty, despite the negative Credit Bureau, that its customer will actually replace existing loans and that no additional liability will be incurred. It receives this by transferring the individual amounts directly to the previous lender and thus not paying the transfer loan to the borrower.
In addition to a power of attorney by the credit customer, a list of the positions to be redeemed is required. When calculating whether savings will actually be achieved through the debt rescheduling, the borrower looks for any prepayment penalty that may have to be paid.