In a debt relief – also called debt cut – creditors forgive a debtor his outstanding debts. This can either concern the complete sum or only a partial amount. This approach can help a debtor become debt free again.

But why do creditors even go for debt relief? Finally, they renounce money that they are legally entitled. This question can be answered as follows: If the economic situation of a debtor is so hopeless that there is no improvement in sight in the near future, a forced execution ordered by the creditor will not be successful – if there is no money, it cannot be recovered become.

Even if the debtor files for personal bankruptcy in such a situation, the creditor will generally have no chance of being satisfied in the course of this procedure. Therefore, many agree to a debt settlement, where they receive at least a portion of the money, or a debt relief.

Debt relief: pattern for the contract between debtor and creditor

There is no form of authority for debt relief. Rather, debtors seeking this step should seek help from an expert, such as a solicitor or an employee of a debt counseling service. These can assist in the debt negotiation with the creditors and take over the correspondence.

The following sample letter illustrating a debt relief should therefore serve only as an example. Remember that this is a contract that should be checked by a specialist.

Debt relief for private individuals: when is this possible?

Possible steps that can lead to debt relief:

Agreement with creditors: The debtor or debt counseling may agree with the creditors that the outstanding debts will be settled by installment. If this attempt fails, insolvency is often unavoidable.

Garnishment: If a debtor does not settle his bills for a longer period of time and at the same time does not react to dunning notices, the creditor can enforce his claims by means of a foreclosure. In this case, one is bailiff wages, account or valuables of the debtor pledge. If no foreclosure is possible, only private insolvency remains.

Filing and conducting insolvency proceedings: Insolvency proceedings involve the use of an insolvency administrator, who distributes the insolvency estate (the debtor’s attachable assets) evenly among the creditors, so that at least part of the claims is satisfied.

The insolvency proceedings are followed by the behavioral phase, in which the debtor has to comply with certain conditions. Then follow the debt relief and the associated debt relief.

Debt relief: sample letter

Basically, a debt relief agreement is concluded between the creditor and the debtor. There is no official form for debt relief that you must complete. If you want to get through your debts in this way, you should always get help from a debt counselor or solicitor.

However, you can use a for debt relief pattern use, but that Never unchanged should use. Here’s an example of what a debt relief contract can look like.