How you can arrange your debts
Means to arrange debts
- voluntary debt rescheduling, that is, debt settlement
- City of Vantaa Social Lending
- Guarantee Foundation’s guarantee for a restructuring loan
- debt rescheduling by court decision
Essential factors affecting the possibilities of debt rescheduling
- debtor’s total amount of debt
- debtor’s possibility to pay back his/her debts per month (facility to pay back debt)
- how long it would take to pay back debt by using the monthly facility
- other preconditions for arrangements
- expiry of debt.
Other factors affecting debt rescheduling include the grounds for indebtedness, the duration of indebtedness, and the reasons leading to over-indebtedness. Likewise, the current amount of paid-back debt affects the arrangement possibilities. The reasons leading to over-indebtedness and debtor’s actions to pay back debt are significant, especially, when seeking a private person's debt rescheduling at a district court.
When arranging debt, the primary aim is always to chart possibilities and make a voluntary debt settlement, that is, a voluntary arrangement with the creditors.
Important factors as regards voluntary arrangements:
- Clarifying all debts and guarantor responsibilities, as well as unpaid bills. Aiming at an overall solution: the available facility should be sufficient for taking care of all the debt responsibilities. Alternatives consist of a payment-program agreement with all the creditors or an agreement on one-time payment (in practice, this requires financing, for example, Guarantee Foundation’s guarantee for a restructuring loan).
- Equality between creditors: proposal for future installments and accruals is divided in ratio between the creditors´ receivables.
- At least some of the interest and expenses can be asked to be forgiven, especially, if the debts are old.
- Duration of payment schedule: how long a payment time is reasonable for both the debtor and the creditors.
- The proposal for a voluntary arrangement can be free-form, but it is possible to use the same debt-rescheduling application form as in legal debt rescheduling. Appendices to the proposal sent to the creditors should include accounts of income and expenditure, as well as factors affecting solvency.
- Agreeing on installment-free periods of a bank loan being managed (for a specific period, the debtor will only pay the interest), when the debtor can pay back urgent and smaller debts and bills.
The City of Vantaa’s social lending is meant for small-income and disadvantaged Vantaa residents to prevent financial marginalization and over-indebtedness, as well as to promote the person's and his/her family's independent financial coping and economic management.
Guarantee Foundation’s guarantee for restructuring loan
Guarantee Foundation grants guarantees for restructuring the loans of private persons in debt and payment difficulties. The restructuring loan is a bank loan that combines different loans into one new loan of at max. 34 000 euros. For additional information.
Debt rescheduling by court decision
If a debtor cannot reach an out-of-court settlement with the creditors, the last option is to apply for statutory private person’s debt rescheduling at the district court of one's own domicile.
Debt rescheduling can also be granted to a debtor who is insolvent if
- the main reason for the insolvency is essential weakening of the debtor's solvency due to sickness, disability, unemployment, or other essential changes in the debtor's circumstances primarily without the debtor's own fault or
- there are other weighty reasons for debt rescheduling, accounting for the amount of debts and obligations related to them in ratio to the debtor’s solvency, and the debtor cannot reasonably improve his or her solvency to cope with the costs arising from the debts.
Debt rescheduling is not generally granted if there is some statutory deterring reason related to the indebtedness or the debtor's acts. Despite the deterring reason, debt rescheduling can be granted on certain conditions, on the basis of so-called serious reasons.
For the conditions for debt rescheduling, deterring reasons and procedures, go to the Finnish Competition and Consumer Authority's (the FCCA) website.
If debt rescheduling is accepted, usually a 3—5-year payment program is granted to the debtor, during which time he/she pays his/her debts monthly according to his/her facility, divided by the amount of the debts. Financial and Debt Counseling will help in compiling the application and will provide help during the entire payment program.
Applications for debt rescheduling shall be addressed to the district court of the debtor's domicile by submitting a confirmed debt rescheduling form. The application forms are available at the office of the district court, Financial and Debt Counseling or the Department of Judicial Administration’ website.