We live in a consumer society. More and more people can afford more and more. Not least because we consumers now have the opportunity to take out a loan or to finance purchases directly from the dealer almost “on every corner”. This of course brings great financial freedom for our citizens.
Responsible management of important
However, greater financial freedom also entails dangers. According to Statista, almost seven percent of all private individuals in Germany are considered overindebted. This means that the value has been at a consistently high level since 2004. The reasons for over-indebtedness can be varied. Separation and unemployment are just two of the most common causes. Also lack of responsibility is quite in order to be found in practice as a reason for excessive loan burdens and indebtedness. In many cases, those affected only benefit from the services of a debt counseling center.
What are debt counseling centers?
Debt counseling agencies offer you professional advice if you financially unable to solve as a consumer. Often sufferers are overindebted and see in the services of counseling centers a “last resort”. Most of the local debt counseling centers are sponsored by the independent welfare service, the consumer counseling centers or the cities, municipalities or districts.
The responsibility for enabling debtor advice lies with the municipalities. This regulates the provisions of social law (Section 11 (5) SGB XII, Section 16 (2) SGB II). In addition to the positions of the institutions mentioned, there are also commercial providers who, unlike other debt advice centers, often charge fees for their advice.
How a debt counseling center works
If you use the services of a debt counseling center, it first gets an overview of your financial situation. To do this, fill out a detailed self-disclosure that enables a comparison of income and financial burdens. After the necessary discussions, it is the goal to arrange your financial situation with you again – if this seems achievable. Drawing up a so-called budget can help you do this.
If the financial situation is complicated or even hopeless, the debt counseling center will try to compare it with your creditors. If this succeeds, you will at least partially pay off the debts incurred. In return, the creditors grant debt relief for the rest of the claim. Of course, all of your creditors must agree to such a comparison. Then this step succeeds, which is also referred to as so-called out-of-court settlement in bankruptcy law. If at least one of your creditors disagrees, trying to compare them is also a prerequisite for entering private bankruptcy.
How you can distinguish dubious from reputable advice centers
Experience shows that not all debt counseling centers work properly. If you use the help of a counseling center of a public body, you can be sure of fair and competent advice as a rule. However, commercial providers should take a closer look and be more critical. Based on various features, you can (probably) identify dubious offers.
Debt counseling typically does not take place as part of a home visit. From reputable places they are at least very unusual. Be critical when you are offered a home visit – especially for an initial interview.
You should generally be skeptical about promises that are too great. Because as a person seeking help in a debt counseling center, you are usually in a first situation. Your expectations should remain realistic. The majority of those affected go into insolvency proceedings, which last a total of six to eight years.
If you use the services of commercial debt advice centers, there are costs. Inquire about the amount before the first consultation begins. If the advisor requests information about how much you can pay each month, you should be critical. Advice centers of public agencies generally advise free of charge.
Dubious advice centers are often noticed with unnecessary time pressure. You request a signature in the first meeting and insist on a quick start of the cooperation. If you are unsure, do not sign the contract with the commercial advice center immediately.
If it is dubious advice centers, further contracts may be offered – in addition to the purely contractual agreement for your representation. Savings contracts, or (supposedly cheaper) insurance for example, have no place in a reputable debt advice. In practice, for example, affected debtors should already sign declarations of membership to clubs that are subject to a fee. Such measures are certainly not purposeful for you.