What is an out-of-court settlement?

What is an out-of-court settlement?

The out-of-court settlement is a way to get out of debt without the need for a court to intervene. It becomes necessary when you can no longer pay your debts, i.e. are overindebted and unable to pay.

Who bears the costs of an out-of-court settlement?

In principle, in the context of out-of-court legal disputes, each party has to bear its own lawyer’s fees – unless the debtor of a claim is already in default at the time the creditor hires a lawyer. …

What does extrajudicial costs mean?

In an out-of-court activity in a civil law matter, for example, the lawyer can charge a so-called business fee for correspondence with the opponent at a rate of between 0.5 and 2.5. Normally, the business fee rate is 1.3.

What is debt settlement?

In a nutshell: the most important things about debt settlement Debt settlement serves the purpose of reaching an agreement with the creditors while at the same time securing the debtor’s livelihood. Deferred payments, one-off payments and installment payments can be agreed.

How long does an out-of-court debt settlement take?

The out-of-court debt settlement process takes one to four months, depending on how many creditors you have.

What happens when you submit a property report?

Consequences of the asset disclosure The deletion takes place regardless of whether the claim has been settled. Important: The creditor knows your employer and your account details from the asset report. You must reckon with a wage or account garnishment.

How does a debt settlement plan work?

The debt settlement plan represents an offer to the creditors. After the debtor has determined what debts he has, he writes a proposal on how he can pay off these debts in the next few years without going into bankruptcy proceedings.

When has an out-of-court settlement attempt failed?

The out-of-court settlement attempt fails if even one creditor does not agree to the plan or objects to it or accepts it in a modified form. The plan is also considered to have failed if a creditor pursues enforcement after the plan had already been negotiated.

How does a debt comparison work?

The out-of-court settlement offers a debt relief by agreeing with your creditors to partially repay the debt – then no more insolvency proceedings are needed. This includes both the option of a one-off payment and payment in installments (usually over 3 or 5 years).

What does debt counseling do?

Debt counseling helps debtors to get out of their financial distress. An important goal of our debt counseling is the out-of-court settlement with the creditors, also known as out-of-court debt settlement. With this procedure you will get rid of your debts without personal bankruptcy.

What happens in a debt restructuring?

As part of the debt restructuring, an overview of the debts and the income and expenses of the debtor is first created. It proposes to the creditors how the existing debts can be repaid with the help of installment payments.

How much does debt counseling cost?

If approved, there are no legal fees for debt counseling. There is only a fee of 15 euros. The following groups of people in particular can take advantage of advisory assistance: recipients of Hartz IV or social assistance.

What happens in a personal bankruptcy?

Private bankruptcy for insolvent persons If an amicable settlement of debts is excluded, the judge can open private bankruptcy proceedings that include the realization of all attachable assets, including existing residential property, for the purpose of debt repayment.

How can I file for personal bankruptcy?

Only the debtor himself can file an application for “private bankruptcy” (namely the applications for the conclusion of a payment plan and the initiation of a forfeiture procedure), even during bankruptcy proceedings filed by a creditor.

What do I have to consider if I file for personal bankruptcy?

The essential requirement is that the installments and debts that a person has to pay are permanently higher than the income of this person. If you want to file for personal bankruptcy, you may not be self-employed at the moment you file for bankruptcy.