Credit despite debt collection
If you have contact with a debt collection agency, this is usually not a good sign. Because that means that there are open claims that are currently not or only partially settled. Not a nice condition, since this usually also suggests that there must be massive money problems, which have often had a negative impact on the Credit Bureau.
Once you have slipped so far, you try to escape the impending over-indebtedness by all means. Often one thinks of a loan despite debt collection, which should summarize all debts and restore a fair amount of liquidity. But what sounds so easy and carefree is a very difficult undertaking. Because you cannot simply take out a loan from any bank or savings bank despite collection.
The requirements for borrowing are clearly defined
All German banks issue their loans according to a fixed motto. If the customer has a good credit rating, a loan can be taken out that is in line with his economic circumstances. However, despite a debt collection, these economic conditions are unfortunately not available for a loan. The customer is neither debt-free and has a sufficiently good Credit Bureau, nor does he receive an income that is high enough to cover all expenses. If this income were available, it would very likely not have any debts and the debt collection agency would not step on its feet.
Other general prerequisites for borrowing are permanent residence in Germany and the legal age of the borrower.
The credit rating needs to be improved
In order to be able to benefit from a loan despite debt collection, the borrower must stretch properly and improve his personal requirements significantly. Because only when a good credit rating is achieved will there be the desired credit.
Since the current financial situation makes it almost impossible to improve on your own, the creditworthiness must be raised to a solid level with the help of other people. A guarantor who is solvent and therefore has a good credit rating would be the best solution. Because in the eyes of the banking houses, a loan despite collection, with a guarantee, is again a good loan. In the event of a payment default, the bank always has the option of using the guarantor and asking them to checkout.
However, there is a lot at stake for the person who offers himself as a guarantor. A loan contract is signed quickly. The risks behind this, however, are rarely properly thought out. Since the guarantor can be held fully liable for the loan, it is not only in the guarantor of the guarantor, but it can also cause him financial difficulties. Therefore, it should always be considered very carefully whether such a guarantee should be taken and whether a loan is really the right solution despite debt collection in such a tight financial situation.
What else needs to be considered
Depending on how far the debt collection agency has interfered in the life of the debtor, it may be advisable not to have the potential loan paid out to the debtor’s checking account. If an account were seized, all of the money would be gone from the loan and could not be used for other purposes.
Sometimes it can be good if the debtor does not let the loan be taken out by someone else. In this way, the money flows into the other person’s account and is not threatened with attachment.
On top of that, it should be borne in mind that a regular loan leaves its mark on Credit Bureau. The German banks report the borrowing to Credit Bureau, and if there is overindebtedness, the debtor can be assumed to have built up additional debt despite the known financial situation. If an intention is proven to him, this can be very uncomfortable. Therefore, a loan has to be thought through very carefully despite collection and should only be taken out if the loan is beneficial for the repayment of the debt and ensures that the future can be viewed positively.