Wednesday, September 09, 2020

Debt restructuring for unemployed.

A debt restructuring for the unemployed is not always easy to implement. Unemployed people do not have the necessary prerequisites to get a German or foreign bank loan. An exception could only be made if the unemployed person has additional collateral, such as a debt-free property or life insurance, or can provide a surety. An editorial over at

Debt rescheduling is particularly problematic for Social Welfare recipients. They have neither a large fortune nor any other security. If this is the case, you could not get a Social Welfare.

Requirements for debt restructuring

Those who want to replace an old loan or combine several loans, you have a good credit and a steady income possess. In this context, the bank will examine very carefully whether the necessary requirements are met in a specific individual case. Debt restructuring offers a number of advantages. In this way, interest rates can be lowered, rates reduced and personal finances can be organized more clearly. Although unemployment benefits are paid very regularly and can only be reduced or canceled in the rarest of cases, it is not possible to use this social security as credit security.

This is the main reason why debt restructuring is very problematic for the unemployed and is rejected by many domestic and foreign banks. Last but not least, every unemployed person should critically question whether he has the financial means to pay a loan regularly, punctually and properly over several months or several years. Otherwise, it would be better to refrain from debt restructuring for the unemployed and look for other alternatives.

Loans for Social Welfare recipients

If anything, this can only implement a debt restructuring for the unemployed if the borrower receives unemployment compensation and 4 has not yet slipped into the Social Welfare. Social Welfare is so tight that it only secures rent payments and livelihoods and leaves no scope for any other expenses. If a larger household item breaks and needs to be repaired or replaced urgently, this can already lead to serious problems.

Here, the legislature has created an opportunity to receive an interest-free loan despite being provided with Social Welfare. To do this, the Social Welfare recipient would have to contact their service manager or case manager in the job center. However, such a loan may only be used for urgently needed expenses and under no circumstances for debt restructuring for the unemployed.

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