Credit defaults and consequences




The repercussions of the crisis of financial institutions and the economic slowdown are reflected not only in the limited availability of financing for the purchase of real estate by banks, but also in the increase in the cost of loans already granted in previous years. Unfortunately, this is also the reason why a large number of people who bought flats earlier, i.e. potential sellers, are currently having problems paying back their loans.

This is due to several reasons

This is due to several reasons

First of all, the vast majority of loans granted were in Swiss francs, whose currency exchange rate has increased significantly, and therefore the amount of the loan in USD has also increased significantly. Secondly, real estate prices have fallen and the difference between the sale price of an apartment and the amount of the loan to be repaid has sometimes increased by several dozen percent.

And thirdly, some borrowers who had a good financial standing and stable job before the crisis lost some of their income or even lost a good job. The combination of all these activities leads to the situation that some people simply cannot afford to pay off the mortgage. What then can they expect and what will be the procedures of the banks granting loans to recover their money?

Seeking agreement with the bank

Seeking agreement with the bank

Of course, the bank will not immediately go to our apartment and will not start execution immediately. In the first place, these will be reminders to the borrower reminding about unpaid installments to be paid. You should not be offended at the bank and pretend that you did not receive them. It is then necessary to go to the bank and try to find an amicable solution.

For example, the bank may propose reducing loan installments by extending the loan period or introducing a grace period of several months in repayment of capital. This is not a significant reduction in installments but always something. In a really difficult situation, the bank can agree to postpone the repayment of several loan installments, although this is by way of a big exception.

Ultimately, if the above solutions do not solve the problem, the bank may agree that the debtor sells his own apartment in order to repay his total debt, which protects the debtor against additional costs of bailiffs.

However, amicable solutions are not always possible because the bank and the borrower cannot find an agreement or the borrower even avoids contact with the bank. In this case, the bank will use the attachment we signed to the loan agreement, which is a declaration of submission to us by execution.

It specifies the amount of debt

bank

For which the bank may issue a bank enforcement order and the date by which the bank may apply for an enforcement clause. Thanks to this, the bank will not have to refer the case to court and wait for the outcome of its proceedings in lengthy payment processes, but based on its books or other documents related to banking activities, it may issue its own documents called bank enforcement titles.

These titles, after providing them with court enforcement clauses, are already enforcement titles, which are the basis for the bailiff to initiate enforcement proceedings. The bank enforcement order significantly speeds up the enforcement process itself. The bank can execute in various ways. For example, from pay for work or from a pension. Can take a bank account with the debtor’s savings. He can commandeered his car, furniture or other valuable belongings. But above all, he will focus on recovering his money from the property that was credited.

Court
There are, however, a few cases in which a bank cannot easily issue a bank enforcement order. In this case, the borrower must bring a normal payment process in which he presents evidence of the borrower’s failure to pay his debts.

However, each of these paths leads to the initiation of a bailiff’s execution and, as a result, the entire debt collection process is initiated, which in the light of the law also uses the means of state coercion and the effect is identical as in the case of the commencement of the procedure by means of a bank enforcement order.

Real estate mortgage use

Real estate mortgage use

Above all, however, the loan is secured by a mortgage on the real estate being credited and it is from this real estate that the bank will want to recover its money. This mortgage is entered in the fourth section of the land and mortgage register. It is a right in rem, i.e. regardless of whose property becomes the property, the creditor may assert his claims from it. Therefore, the bank does not own the property and does not become the owner of the property, as many people think, but it can enforce its claims.

The owner of such a property can sell and get rid of trouble in this way, however, no buyers who consciously make choices will buy a mortgaged property. Unless some of the proceeds from its sale will be used to pay off debts to the bank. The owner cannot, however, lead to a situation in which the value of the property would significantly decrease and the bank may demand that the borrower give up.

The land, building, residential or commercial premises may become the subject of a mortgage. The mortgage can be secured by any ownership right, perpetual usufruct right and any cooperative ownership right. Therefore, the bank can satisfy its claims from secured property, regardless of whose property it is.