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Loan termination – what to do if the bank ends the loan agreement

The bank’s termination of the loan is probably the worst event that can happen to a bank customer. Because the terminated consumer must expect at least two very hard consequences immediately after the termination of the loan contract: On the one hand, the bank reports the loan termination to credit agencies, such as private credit checker – on the other hand, the money house usually requires that the consumer still has the outstanding debt within one paid for in a very short period of time.

Conditions of credit termination

Conditions of credit termination

However, the termination of the loan contract by the bank is not a fact that strikes the borrower as a surprising stroke of fate: unlike the borrower, who can cancel his loan contract, for example, by simply rescheduling or early repayment of the entire amount of money, the bank can only do so from the so-called exercise extraordinary right of termination. Only if there is an important reason and the bank has to fear, for example, that the borrower can no longer or will not pay the outstanding debt can it terminate the contract prematurely.

As a rule, the bank terminates the loan if the borrower has been in default several times and has not paid the due repayment installments to the bank as agreed. Or if it announces that it will no longer be able to pay the loan installments in the future. Sudden unemployment or long-term incapacity for the borrower could also be reasons for the bank to terminate the loan exceptionally.

Open monetary debt must be paid in full promptly when the loan is canceled

Open monetary debt must be paid in full promptly when the loan is canceled

However, the actual termination of the loan contract is usually not surprising for the consumer – it is usually preceded by a dunning phase of several months. Only then does the actual termination take place. The former bank customer then has two weeks to transfer the outstanding loan debt, including any damages and interest on arrears, to the bank. If the customer is unable to make this payment within the specified period, the claim is handed over to a bankruptcy trustee – bankruptcy proceedings are opened against the consumer.





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