We have debts because we simply spent too much! It is a widely held prejudice. However, the cause of this kind of difficulty is rarely excessive consumption. “Personal crises are often the cause. For example, the loss of a job, health problems, or a divorce,” corrects Sebastien Mercier of the umbrella association Dettes Conseils Suisse. Hiding the problem only makes it worse; the debts swell. This becomes critical when current expenditure is durably higher than income.
“Unfortunately, many people come to see us too late. Often only when their wages are seized,” says André Widmer, from the Triangel advisory service in Zug. So, if you are concerned about money, it is better not to hesitate and contact a serious debt counseling body as soon as possible. The first session is often free, as in St. Gallen and in the two Appenzells, or at least at an affordable price. According to our research, even the highest price is only 100 francs.
But beware! Besides serious authorities, there are also some who trade debt consolidation. They do not develop plausible budgets and do not negotiate with creditors: they only collect fees without much consideration.
More debt than previously thought
A serious advisory body begins by listing all debts and analyzing the financial situation. It also asks the creditors to suspend the collection measures and other proceedings temporarily. “Our clients are generally terrified by this list of debts. Often the amount is twice as high as they thought, “says Carmen Kern of Caritas Thurgau. “In the event of an already over-indebtedness, the most complicated is to find what we owe to whom and to obtain the acts of default of property and the extracts from the prosecution register,” specifies Barbara Bracher, of the Lucerne Bureau for debt problems.
Specialists are looking at ways to cut expenses. Especially in terms of credit and leasing contracts or customer cards. Often, the legal prescriptions are not respected, and it is then easy to get out. We also screen for superfluous insurance; we check whether there are arguments to be put forward, for example, for a reduction in health insurance premiums.
To check whether a person simply has enough money to pay off their debts, the help desk draws up a sanitation budget. It is based on the subsistence minimum, the individually calculated amount that can be kept even when the salary is entered. This includes a basic amount, rent, and health insurance. The helpdesk also calculates taxes, medical care costs, and a reserve. The other column shows income: in many cantons, the 13th month is included; in some, you can keep it for yourself.
If there is indeed something left (the consolidation rate), one must ask whether the debtor is able to put enough money aside in the space of three years to make the creditors and offer for installment payment. Interminable phases of consolidation are not desirable: a debtor can hardly resist a period of more than three years. Often, he has lived in precarious conditions for a long time, and he is exhausted. It is important that the living and income situation remains stable during the consolidation phase. If it is not possible to settle all of the debts, the creditors must agree to renounce a party. There, it is necessary that the consulting office shows the talents of a negotiator.
Decisive tax office
Since 80% of debtors have tax debts, the Tax Office often has the last word in terms of the sanitation offer. “In general, it tips the scales,” says Jurg Gschwend of Plusminus in Basel. The tax offices are variously cooperative. There is good agreement in the cantons of Basel-City, Graubünden, Glarus, Zug, and Ticino, according to local help desks. Elsewhere, it would be rougher, as in Friborg and Lucerne.
If the helpdesk cannot convince all the creditors of a repayment plan, and extrajudicial debt restructuring is impossible.
The other possibilities:
1. Remission of debts
If the indebted person still has some resources but needs a grace period, a sensible alternative consists of an amicable settlement of debts. Then the court stayed the proceedings for up to six months and appointed a curator who attempted to negotiate an out-of-court settlement with which all the creditors agreed. Costs are reduced, generally between 800 and 1500 francs.
2. Judicial arrangement
If the creditors do not cooperate, a judicial arrangement may be the solution, since, in this case, only the majority of the creditors must agree. As the procedure is complicated and requires a lot of effort from the curator, the costs are high: easily several thousand francs.
bankruptcy A private bankruptcy can give respite when one wishes to recover financially, but one does not find, at the time, agreement with the creditors. The debtor can then only be prosecuted for his debts when he returns to a better fortune. Legal costs: up to 5,000 francs.
The most crucial bills are paid first: rent, health insurance, food, taxes. “If the current expenses can be covered with the receipts, it is possible to break the debt spiral,” underlines Barbara Bracer of the Bureau for debt problems in Lucerne.
If someone is at risk of falling into poverty, these authorities lend a hand to contact foundations and find help. “A cardinal part of our work consists of supporting our clients in their lives with debts. We are building perspectives together. The debts may be paid later,” says Max Clemens of the Zurich cantonal council office.
When you are over-indebted, you are often punished for life. Those affected are more likely to fall into poverty and are disadvantaged in many areas: housing, health, work, social contacts. For the State, there are increased expenses. And creditors usually leave empty-handed.
This is why it would be better to give debtors a second chance to recover economically. Or, under certain conditions, erase debts without reimbursement. This cancellation of the remaining debts is possible in most European countries and in the United States, but not in Switzerland. The Federal Council intends to ensure this, as it announced in March 2018. On behalf of the parliament, it is developing a model on this subject. But until a reform takes effect, only those who are able to meet the demands of creditors at least in part can escape the seizure of their income up to the subsistence level.
Further more info about debt relief or payday loan relief you can visit online.