Understanding over-indebtedness

Published on by Delphine from OltottMesz

Over-indebtedness, what should you know?

Are we considered over-indebted from the moment we have contracted several loans?

What are the solutions for people who find themselves in a delicate situation?

We shed light on the concept of over-indebtedness and list the means available to individuals in difficulty.

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Over-indebtedness: the definition

Over-indebtedness is a person's inability to pay off debts.
exists when it no longer has sufficient income to pay all of its
charges, whether they are loans or fixed / current expenses (rent, food, etc.)

The explanation of the phenomenon

On the one hand, one can have contracted several loans without being in a situation of over-indebtedness, if one constantly supports his monthly payments and that one benefits from a sufficient remainder to live for oneself and its close relations. On the other hand, households sometimes face its unforeseen and consequent expenses which do not necessarily betray an over-indebtedness.
In principle, over time, a household should not allocate more than a third of its income to the payment of charges.
This is a reasonable debt-to-debt ratio that banks generally take into account when applying for a loan. The nature of the debts, their share in total expenses and the professional situation are some of the criteria to be taken into consideration when studying the context of the borrower who is struggling to settle his debts. payment incidents are repeated month after month.

Solutions to get out of debt

Rebalance your budget

To see clearly, it is recommended to take stock of your budget. We tend to have our heads in the handlebars and we are not necessarily aware of the expenses that weigh the most and those that can be avoided. For example, if money outflows linked to leisure
represent too large a share, it is still possible to cut back on this expenditure item and rebalance the budget.
Before thinking about restructuring its debt, some households have every interest in comparing the prices of energy suppliers as well as to be interested in good manners allowing to promote savings in this area.

Restructure your debt

If you find yourself in financial difficulty and fear that you will no longer be able to
pay your due dates in the future, you may have already thought about repurchasing credit.
This is a way to unify its monthly payments but above all to reduce the monthly payments that must be repaid to its creditors.
This operation involves an extension of the duration of the credit and an increase in the
overall cost of borrowing. It helps a number of borrowers gradually get out of difficult circumstances.

Apply to the Bank of United States

As a last resort, you can consider an over-indebtedness procedure. The lawsuits that the creditors have possibly brought against you are suspended for a certain time if your file is declared admissible by the concerned commission, after being deposited with the Bank of United States.
Among the measures frequently selected, we can distinguish the possibility of
rescheduling of repayments or a downward revision of the interest rate. The over-indebtedness commission only studies requests from individuals and not requests from professionals.
All persons who apply to the Bank of United States are registered with the FICP (Personal Credit Repayment Incident File). This institution proposes a recovery plan, if necessary it has little other solution than to seize the district court for a partial or total cancellation of the debt, it is the personal recovery without judicial liquidation.

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