It is said around 8% of the Swiss population are over indebted and are several months behind on debt repayments. Fortunately, these consumers can make use of debt counselling to help out.
Debt counselling is part of the Swiss Debt Enforcement and Bankruptcy Act (DEBA).
As in South Africa, Swiss consumers facing debt problems can negotiate directly with their credit providers to try make voluntary arrangements. If these fail then consumers, in the different areas (Cantons), can reach out to local public debt counselling centres.
At these organisations, debt advisors or debt counsellors will consult with the consumer and try to help with budgeting and negotiations with credit providers. Many organisations offer these services for free or a small fee.
There is no specific qualification for debt counsellors although many have training as financial advisors or social workers.
‘Most debt repayment plans are designed over 3 years’
Most debt repayment plans are designed over 3 years and can include all sorts of debts such as loans, credit cards, cars and bonds. While in the process consumers are not listed on any credit bureaus and are simply encouraged not to take on extra debt.
If everyone agrees to the restructuring plan then the consumer simply has to stick to the plan and pay off their debts. During this time credit providers are not allowed to take further legal action. Matters can however end up in court if not everyone is happy and, in such cases, it can take weeks or months to finalise the judicial restructuring agreement. In such cases the debt counselling centre will assist the consumer to prepare the needed papers and the consumer’s former obligations can be suspended.
If consumers do not stick to the voluntary arrangement or court order then they can face new legal action from credit providers and may lose assets or be declared bankrupt.
‘In many ways the process is similar to the South African debt review provisions but are not as heavily regulated’
In many ways the process is similar to the South African debt review provisions but are not as heavily regulated. Repayment terms are shorter and qualifications of those who practice not clearly defined. There is no single regulator who oversees the process in the country but matters are rather dealt with on a regional or canton bases.
Since matters are not reported to one central regulator and are not shown on credit records it is unclear how many consumers are currently making use of debt counselling in Switzerland at present.