In principle, it is permissible to take out a loan despite insolvency. During the insolvency proceedings, however, the approval of the insolvency administrator is required. If the debtor duly fulfills his payment obligations during the good conduct phase, the release of residual debt by taking out a loan does not seem to be endangered despite insolvency.
The problem is, however, the situation immediately before the opening of private bankruptcy. At this point in time, the insolvent borrower, despite being aware of his inability to pay, can meet the fraud.
Bankruptcy means the state of insolvency. By definition, insolvent individuals are no longer able to meet their payment obligations. The last resort from the precarious financial situation remains the initiation of consumer insolvency proceedings, with which insolvent consumers aim to obtain the residual debt exemption after completing a six-year good conduct phase. During this phase, the attachable income is used to pay the costs of the proceedings and satisfy the creditor claims. Since all attachable rights and assets are also part of the insolvency estate, the freely available funds are limited to the attachment exemption limit.
Stressful negative comments
Due to the limited financial resources, it is difficult to find a lender who grants a loan despite insolvency.
The insolvency petition as well as the opening of the insolvency procedure is registered as a negative feature in the database of the credit agency credit bureau, which obtains this data from the public debtor directories of the insolvency courts. Negative entries related to bankruptcy persist for a period of three years.
credit bureau deletes this data only at the end of the third year after complete settlement of the outstanding claims. Obtaining a conventional loan despite insolvency or immediately after having obtained debt relief proves to be almost impossible. Classic banks such as banks and savings banks are leaving as lenders.
Private credit as an option
The most obvious and easiest way to get a loan despite bankruptcy is through the money lending of relatives and friends. Related persons usually bring with them the understanding of the bad debt and the necessary confidence in the borrower. If their own financial situation allows, they are therefore ready to help the insolvent loan seeker with a personal loan from the financial crisis. Given the financial distress, these lenders usually renounce the settlement of interest and are accommodating in terms of repayment modalities.
If a loan despite bankruptcy in the circle of relatives and acquaintances is not possible due to lack of suitable financial backers, a personal loan from foreign private investors may be an alternative option. It is important to look for trustworthy providers, especially in this area of the credit market not only serious offer. Private investors for loans despite bankruptcy can be found on personal loan platforms, which occupy an intermediary position between the two credit contracting parties.
Alternatively, it opens up the possibility to place a credit application in ad markets, which is aimed at private investors. A private loan is not subject to the strict prescriptions of a conventional bank loan because the private lenders set the conditions themselves. In this way, despite insolvency loans can be completed on smaller amounts of money. Often a repayment can be arranged in small installments. Private investors require proof of a regular income as a basic requirement for lending.
As an insolvent borrower, one must be aware that the conclusion of a new loan despite bankruptcy with additional payment obligations. Therefore, only those obligations should be entered which can actually be fulfilled. Loans taken out after the opening of the insolvency proceedings do not fall into the consumer insolvency proceedings, unlike the debts which were entered before the bankruptcy petition. As a result, the newly entered credit liabilities are not covered by the residual debt exemption, meaning that they have to be settled in their entirety.