Debt mitigation- remedies to debt problems

General

Debt adjustment is a remedy for individuals in serious payment difficulties and is based on Act No. 101/2010

The aim of debt adjustment is to achieve a balance between debts and ability to pay through an agreement with creditors.

Debt mitigation is free.

For individuals in serious financial difficulties

Debt mitigation is an option for individuals who:

• have many financial commitments

• do not expect to be able to pay its debts, for example because the amounts of instalments (the burden of payment) are too high

If you are unsure whether debt mitigation is suitable for you, you can contact the Debtors' Ombudsman (UMS) at 512-6600

You can also request a call and receive further information about the service of the Debtors'Ombudsman.

Advantages

• A person who seeks debt mitigation shows an effort to negotiate and fulfill their commitments.

• If the induvidual has the ability to pay, the person pays a monthly amount to a bank during the debt mitigation period. The bank then mediates payments.

• If a debt adjustment agreement is reached, claims are no lone in default.

• Amendment to the contract may be requested if circumstances change during the period of the contract.

How does debt mitigation work?

Effects of Debt mitigation

A debt mitigation agreement results in entries on the default register being removed in respect of claims covered by the agreement. Debt mitigation generally has a negative effect on credit rating and thus on borrowing opportunities for a certain period of time. It should, however, be noted that Creditinfo is not permitted to use information about the debt mitigation (the notice to creditors in the Legal Gazette) in a credit report once one year has passed since the notice was published.

Onwards: application process