The option to write off part of your debt is an option that current Polish regulations provide us with. However, in order to be able to effectively apply for debt cancellation, first of all you should read some of the most important information regarding both the conditions that must be met for our application to be successful and the difference between the possibilities available in this regard.
What is an application for debt cancellation?
First of all, some of the most basic things need to be clarified. Common terms, such as debt cancellation by a creditor or debt relief application do not fully reflect the specificity of the situation. According to the law, we can apply for partial or total cancellation of the interest part of the debt. This means that the capital part (the sum of the loan or credit alone) will continue to be our commitment. The essence of applying for debt cancellation in the interest part is, in fact, convincing the creditor to agree to give up the profit that the loan or credit granted to him would bring. We can apply for interest redemption in two general situations:
- If our financial situation objectively does not allow us to repay the entire commitment and it happened as a result of random circumstances, e.g. illness or accidental loss of job
- The cancellation of the interest portion of the debt is justified by the public interest, i.e. if the entire debt needs to be repaid, the applicant would have to benefit from financial State aid.
Another important piece of information is the fact that we only have the right to apply for partial cancellation of debts. The decision on the positive or negative consideration of the application will always be the sole responsibility of the creditor, e.g. a bank or loan institution. In the event of a negative decision on our application, we may refer to either the creditor himself or the Financial Ombudsman. In the latter case, however, it should be remembered that the institution of the Financial Ombudsman has no power to order a bank or loan company to change a negative decision: the only thing the Financial Ombudsman’s office can do is intervene in our case, e.g. by negotiating with the creditor on our behalf.
What should the application for an interest redemption look like?
An application for debt cancellation in its interest portion or for debt cancellation with a loan company should always include:
1. Precise data of the applicant
2. Arguments for a positive consideration of our request
3. Documentation confirming the truthfulness of our arguments
4. Expression of readiness to repay the principal part of the debt
5. Accurate indication of the part of the debt to be redeemed (capital interest, penalty interest, commission)
In the event that our application is incomplete or the creditor, for various reasons, expects to attach additional documentation, we will have 7 days to complete the application.
Cancellation of debt by the court: is it possible?
An alternative option to the solution described above may be a partial cancellation of debt by the court pursuant to the announcement of so-called consumer bankruptcy. However, also in this case there are precisely defined requirements that must be met by the applicant for it to make sense to start such a case. The most important of these conditions are as follows:
- The applicant’s difficult financial situation must result from illness or random events
- Existing debt cannot be consumer debt
- The applicant cannot run a business
- If the applicant’s job was lost, it could not be a consequence of disciplinary dismissal or dismissal by agreement of the parties
- The applicant could not incur further obligations to repay existing debt or spend loans in a manner inconsistent with their intended use
If we qualify for any of the points listed above, our application for debt relief through consumer bankruptcy will almost certainly be rejected by the court. You should be aware of the fact that the institution of consumer bankruptcy is intended only for this group of people who really got into financial trouble without their fault, e.g. losing assets as a result of a fire or by losing their source of employment due to a serious illness.
Declaration of consumer bankruptcy also does not mean complete cancellation of debts. Based on the assessment of our financial standing and as part of negotiations with creditors, the Court will set a new repayment plan for a certain part of the remaining debt.