Those who have debts can appeal to an institution that can assist you with debt problems, but sometimes that does not help. Depending on the advice you receive, you can try to submit a request to be admitted to the collective debt settlement system.
But what exactly does collective debt mediation mean? Can you then also borrow money in the meantime?
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If it is not possible for them to provide the necessary help, you can submit an application to join the collective debt mediation procedure. This is a legal procedure whereby a judge will appoint a debt broker. He will try to clear all debts.
The debt broker who is appointed will receive your income. A part of this will be transferred to you so that you have money to spend the month around. This is called the living wage.
Of the remaining amount, the debt broker will first pay his fees and afterward settle all other debts. In principle, the debt broker will also provide an extra piggy bank that you can receive at the end of the procedure.
The living wage serves to pay fixed costs such as electricity, food, clothing, …. The rent of your home may also be included, but it is no exception that the debt broker will pay the rent itself.
If an urgent issue is necessary, for example, to buy a new refrigerator, washing machine, … you can contact the debt broker and ask for a one-off payment. Tip: send him/her already through which replacement device you would buy and compare with prices to show that this is not an expensive model. The debt broker likes to see you make an effort and never gets the impression that you are trying to profit. Honestly, it lasts the longest in these situations.
You are also required to pass on all changes in your financial situation to the debt broker such as an inheritance … because that can speed up the procedure.
Collective debt mediation: What after the procedure?
The collective debt settlement procedure comes with its advantages and disadvantages. The debt mediator will take on a lot of work and can normally agree on favorable payment terms with the creditors. It will also be investigated whether there are no debts that have been lost.
At the end of the procedure, the debt broker will in principle have built up a piggy bank for you. If everything is refunded, he will make these savings available to you. View this as an extra for a new start.
It is also the case that, after this procedure, collective debt mediation will be one more year on the blacklist of the National Bank. This prevents you from borrowing money from the bank. This is to protect you, but you may be able to experience it as a disadvantage to the collective debt broker scheme. Read more about the blacklist here.
Borrowing during or after debt mediation possible?
The arrangement of collective debt mediation is there to help you out of need. The debt broker will mediate on your behalf and provide repayment of all debts. Your listing on the blacklist makes it almost impossible to borrow money from a bank. Those looking for goodwill find opportunities somewhere, but this is not sensible.
Do you need money during the debt mediation procedure? Then you can contact your debt broker about this. Borrowing money during debt mediation is therefore not necessary and not the most sensible option.
Can I borrow money after the procedure?
You will be listed on the Black List of the National Bank for another year. The only option to borrow money is a mini loan at parties such as Payday. These are best suited to bridge a month, for example, if your salary is paid out late. In principle, amounts under 1,000 euros do not need to be checked by the bank and in many cases do not pose a problem.
End of debt mediation = New start. It is understandable that you consider the end of the procedure as a new start. Many people therefore quickly start looking for a new home and forget that their listing on the blacklist can give problems.
We, therefore, advise you not to proceed to buy a house too quickly, because even if you are granted a loan, there is a chance that the rates will be higher because the bank will estimate you as a higher risk because of the listing on the blacklist. After all, it is not the intention that you immediately have to bear a (too) high debt burden. Do not rush your decisions.
Watch your debt burden
Debt mediation is no fun! Do you already feel the burden of all debts? Then first determine whether you still have sufficient control over your situation and try to adjust where possible before you start thinking about a new loan.
A lot of people are happy at the end of the procedure that they can start a new start, but for each positive reaction, you can also find a negative reaction about the scheme. Life of a small amount (the living wage that you receive) is quite a test, so do not let it get that far.