Get rid of debts without personal insolvency

One option is to use funds from your social environment, for example from friends or family. Especially if you have wealthy family members, can take advantage of an early inheritance or someone still owes you money that you have not yet claimed. You should only take third-party funds from private sources from those who are not in need of the money or who can wait a while until they receive it back.

ATTENTION: friends and relatives also usually want to get this money back at some point. Even if you don't normally have to worry about interest here, such a deal can put a lot of strain on relationships and expose you to social pressure. It is therefore essential that you take the time to discuss the exact conditions under which you will receive the money and record your agreements in writing.

Some foundations have the task of helping indebted and over-indebted people with debt relief or in particular financial difficulties.

The best known of these is the Marianne von Weizsäcker Foundation, which is active throughout Germany and supports former addicts in clearing the debts they have incurred as a result of their addiction. In some federal states, there are similar foundations for people who have committed offences and for whom resocialisation after a prison sentence is to be made easier. Some foundations give their money away, while other foundations require you to repay the funds within a reasonable time frame. In addition, most foundations require proof that the debts are a thing of the past and that no new debts will be incurred. In return, the foundations support the debt relief process and sometimes even offer to take over the negotiations with the creditors.

ATTENTION: Foundations usually have a very specific target group and an application is only worthwhile if you fulfil the requirements. Before submitting an application, it is worth making detailed enquiries or seeking debt counselling. 

If you have a job and have proven to be a reliable employee, you may be able to receive a loan or bonus payment from your employer to settle your debts. For many employers, a loan is not only a good way to retain employees, but the best precaution to avoid seizures of earnings, which mean much more work and liability risks. ATTENTION: In the case of a loan, your employer will usually deduct monthly repayment instalments from your salary. It must be ensured that the remaining monthly salary is sufficient to live on. The best thing to do is to determine the maximum amount that can be seized according to the seizure table.

Banks speak of debt rescheduling when a new loan is taken out to pay off other debts. First of all, always talk to your main bank or the bank to which you owe money. A bank will often offer you a more favourable debt rescheduling loan if, for example, you have been using an expensive overdraft facility for a long time.

If the bank itself is one of your creditors, debt rescheduling is not classic third-party funding. In the best case scenario, you could even get rid of your debt faster with the same monthly repayments thanks to lower interest rates on a new instalment loan. In case of doubt, however, debt rescheduling can also be associated with an increase in the loan amount, for example if you replace a 2,000 euro overdraft facility with a 4,000 euro instalment loan. Such an increase in the loan amount harbours the risk that the debt rescheduling will only lead to even higher debt. You should therefore check whether the bank's offer is actually worthwhile.

Another model could be that you take out an instalment loan with a new credit institution with which you have no previous business relationship. You can use this instalment loan to compare yourself with all your creditors. The advantage is that the debts are now only owed to one creditor – but of course they are still there.

ATTENTION:

• As banks always obtain a credit report before granting a loan (e.g., from SCHUFA), it may be difficult to obtain a really favourable loan for debt restructuring if you do not already have debts with the bank anyway and the bank therefore has the prospect of regular repayments.
• Repayment instalments and/or interest can also be so high that there is no longer enough money available elsewhere and further debts arise. It can be helpful to draw up a budget beforehand and check how much money you can set aside each month and use for the instalments.

Anyone who has rental debts and receives citizens' money has the opportunity to apply for a loan from the Jobcenter in accordance with Section 22 SGB II. In this case, the Jobcenter covers the rental debts if there is a risk of loss of living space. The loan is generally interest-free and is deducted in monthly instalments on a pro-rata basis from the citizen's allowance.

CAUTION: A loan from the Jobcenter cannot be used to settle all debts. It can only be used to help secure the flat with current rental debts and to help with electricity debts or energy debts.