Quickly recognize the debt spiral
Many consumers have the problem that actually normal debt develops into an overindebtedness that can no longer be overseen. It is not always the fault of one’s own fault. Often, several major life events, such as unemployment, illness, divorce or the death of a loved one, will eventually lead to a situation in which payment obligations already entered can no longer be met. Frequently, after deduction of fixed costs, the consumers concerned will no longer have enough money to earn a living. In the long term, this leads to the collapse of the entire financial basis, to considerable mental stress and also to illnesses of those affected. Clarification at http://www.xaydunggiaphong.com/2019/08/payday-loan-consolidation-more-about-online-payday-loan-consolidation-companies/
Debt counseling centers continue to help
Debt counseling services check the legality of the claims
inform the debtors about their legal options for action in the case of foreclosure measures and support the consumers involved in drawing up a payment plan and in upcoming negotiations with the creditors. The debt counseling services also provide information on the new consumer insolvency proceedings and support those affected for free.
The difference between debt, debt and over-indebtedness
For different situations of a debtor different terminology is used, which one should know. For each debtor, the over-indebtedness is reached at a different amount.
Today it is estimated that at least two million German households are over-indebted. And once again just as many households are on the verge of over-indebtedness.
What are the differences between the terms “debt”, “debt” and “over-indebtedness”? One should know these differences, so that one can estimate for oneself, at which point of the debt spiral one finds oneself.
What very few consumers know, they already have debts when they take out a loan. Even when you use the disposition credit and the credit card debt. As long as these “debts”, or liabilities, together amount to no more than 25 per cent of the net monthly income, they are considered unobjectionable and uncritical. Only when this limit is exceeded, consumers come into the critical area of debt.
Experts talk of “debt” when multiple loan commitments or liabilities come together at levels that can not be offset by the monthly income, but are still covered by potentially existing assets and assets. This is always the case, for example, when a home loan exists. Although the amount of the loan exceeds the monthly income, it can be borne and is covered by the value of the property.
The experts talk about over-indebtedness when debtors can not fulfill their obligations under loan agreements for at least three months without jeopardizing payments for rent, electricity and livelihoods. If it is not possible in this situation to uncover savings potential alone or to generate additional income through a part-time job, then it is high time to go to a debt counseling agency to seek solutions with competent debt counselors, which can ultimately end in personal bankruptcy.
The debt spiral – from debt to personal bankruptcy
The spiral exists in so many different situations, it starts very small and it is getting more and more. In the end, you can not get out of this vicious circle of debt spiral without outside help.
A debt spiral is used when the debt grows unchecked into a mountain of debt. This starts with simple debts, goes beyond debt to over-indebtedness and is a creeping flowing process.
Dismantle the mountain of debt again
Simple debts get well with a budget plan and a payment agreement under control. The reduction of debt in the debt phase is more difficult. Here it can be useful to set up a debt plan and maintain a budget book. Then reduce costs and increase revenue. If you are already visiting a debt counseling service during this phase, you may be able to get out of the debt trap without having to file for private bankruptcy, as is often the case with over-indebtedness.