Initial situation and planned regulations on loan law

As a result of the Covid19/SARS-CoV-2 pandemic, many people are currently suffering, and will continue to suffer in the near future, in some cases considerable losses of income. This loss of income can painfully affect many borrowers. Consumer loans are usually paid off from current salary or income and/or earned income. When the respective loans were taken out, a crisis like the current one was neither foreseeable nor foreseeable. There is a threat of termination in the event of default on interest and redemption payments and – if present – the realization of collateral provided.

We currently have a formulation aid from the German government for a draft law to mitigate the consequences of the COVID 19 pandemic in civil, insolvency and criminal procedure law, which according to press reports is to be cast in legal form by the German Bundestag on 25.03.2020.

This article deals with the planned regulations there on consumer loan agreements.

Deferral of interest and redemption paymentsfrom 01.April to 30.June 2020 possible

For consumer loan agreements concluded before 15 March 2020, claims of the lender for repayment, interest or principal payments due between 1 April 2020 and 30 June 2020 shall be deferred for a period of three months from the due date if, due to the exceptional circumstances caused by the spread of the COVID 19 pandemic, the consumer suffers a loss of income which makes it unreasonable to expect him to perform the service owed.
He cannot reasonably be expected to provide the benefit, in particular if his reasonable subsistence or the reasonable subsistence of his dependants is at risk.
The borrower can, however, continue to make the payments as before. A deferment of payment shall then be deemed not to have taken place.
The draft also provides that the deferral period can again be extended by the Federal Government by statutory order until 30 September 2020 if it is to be expected that social life, the economic activity of a large number of companies or the employment of a large number of people will continue to be significantly affected by the COVID 19 pandemic.

Deviating agreements with the bank are possible

Irrespective of the deferral regulation for consumer loans, it should remain possible for the bank/credit institution and the consumer to reach agreements on partial payments, interest and repayment adjustments or debt restructuring measures.

Here it should be carefully examined whether the scheme offered to the bank/credit institution does not deviate adversely from the rights granted. Significant changes in interest and redemption payments as well as – supposedly sensible – debt rescheduling measures may also be expected due to long commitments. will still be affected after the Corona Crisis.

Exclusion of the termination according to. §490 BGB

Cancellations by the lender due to late payment, a significant deterioration in the financial circumstances of the consumer or the value of a security provided for the loan should be excluded until the expiry of the deferral. This may not be deviated from at the expense of the consumer.

amicable settlement and in case ofFailure to renew a contract

by telephone) on the possibility of an amicable settlement. If an amicable arrangement cannot be reached for the period after 30 June 2020, the contract term shall be extended by three months. The respective due date of the contractual services is postponed until the end of the three-month period. Here too, the Federal Government reserves the right to extend the period to 12 months by statutory order.

Possibility of extension to small businesses

The Federal Government may amend the provisions intended for consumers in this information letter by statutory order and in particular include micro enterprises in the scope of application. However, inclusion in the first step is not envisaged.

How can we help you?

We offer you a wide range of services so that you can lead your company through the current crisis and you have the opportunity to act in your economic existence. The OVH lawyers and tax consultants are there to help you with advice and support.
In the course of this, we discuss which concrete measures come into consideration for you and develop a protection concept individually adapted to your company.
We are also happy to support you in the preparation, tax and legal review of the measures to be taken.

Finally we would like to point out that this information only contains a non-binding overview of the topic addressed. They do not replace legal or tax advice. We are always at your disposal as a contact person for this client information and for advice.

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