Debt help in Switzerland

If you can no longer pay your bills, ask for advice early. Every canton has public debt advice offices, and they look at your whole situation with you: your budget, your debts and any Betreibung (debt collection) against you. With them you can work out a payment plan, a settlement with all your creditors or, if nothing else works, personal bankruptcy. The hotline 0800 708 708 is free and answers from Monday to Thursday, 10:00 to 13:00. You can also find the office for your region on schulden.ch. If your budget is already stretched, a new loan can make things harder.

Where to get help

Every canton has public debt advice offices (ch.ch). Schuldenberatung Schweiz, the umbrella organisation of the non-profit debt advice offices, lists them by region. Its members commit to apply the umbrella organisation’s common guidelines when they advise.

What to expect. Caritas describes its own debt advice like this: it is free, every adviser is bound by professional secrecy, and the advice is given in the language of the place where you live. A first conversation looks at your situation; if you need more, Caritas arranges further personal advice. Caritas also says plainly what it does not do: it does not take over your debts. It helps you find a way to deal with them.

What an adviser can see. With your consent, a debt restructuring service that your canton has named and supports can look up your consumer credits at the IKO (Informationsstelle für Konsumkredit, the information office for consumer credit) (KKG, Art. 24). That shows the loans and leasing contracts recorded there.

Choosing a service. For a settlement with your creditors, Caritas recommends a reputable debt advice office and points to the members of Schuldenberatung Schweiz. Be careful with anyone who asks for money before doing anything for you (see the warning below).

When to ask for help

Ask as soon as one of these is true for you:

• You have money problems and can’t pay your bills.
• A creditor has started debt collection against you, or a summons for payment has arrived.
• You are thinking of taking out a loan to pay other debts. Read the section on loans below first.
• You pay one bill by leaving another one unpaid.

ch.ch advises getting help in the first two cases. Caritas adds that the earlier you deal with money problems, the better an office can advise you.

What to do first

1. Open every letter and keep it. Reminders and official letters carry deadlines. A summons for payment gives you 10 days to object (DEBA, Art. 74).
2. Write down your budget. List what comes in each month and what you need to live: rent and service charges, health insurance premiums, travel to work, meals at work, maintenance payments, childcare, your current taxes, and money set aside for health costs such as your deductible. A debt advice office builds a budget from these items (Caritas).
3. List every debt. Note who you owe, how much, since when, and whether a Betreibung is running.
4. Talk to your creditors before the due date. You can agree with a creditor how much you will pay and by when. Your budget should allow you to pay the agreed amount within 3 years (ch.ch).
5. Ask for the relief that exists. If your taxes are hard to pay, contact your cantonal tax administration: smaller instalments or a later deadline are possible (ch.ch). If you earn little or have several children, your canton may reduce your health insurance premiums. Many cantons tell you automatically; in others you apply every year (ch.ch).

Some debts weigh more than others. In a debt settlement, Caritas explains, the law gives some creditors priority, and they are paid in full: health insurance premiums and maintenance claims from the last six months, and contributions to the AHV, IV, accident and unemployment insurance and income compensation. Fines and monetary penalties must also be paid in full, because an unpaid fine can be converted into a custodial sentence. An advice office helps you decide what to pay first.

If you receive a summons for payment

A creditor who isn’t paid can file a debt collection request with the Betreibungsamt (debt collection office). Your name is then entered in the debt collection register. A creditor usually sends a reminder first, but the law does not require one (ch.ch). Here is what follows.

1. The Zahlungsbefehl (summons for payment). The post or the debt collection office hands it to you or to an adult in your household (ch.ch).
2. If you owe the money, you have 20 days to pay (DEBA, Art. 69). If that is hard, get advice and speak to the creditor; you can agree to pay in instalments (ch.ch).
3. If you don’t owe it, file a Rechtsvorschlag (objection). You can do it orally or in writing when the summons is handed to you, or at the debt collection office within 10 days (DEBA, Art. 74). You don’t have to give reasons (DEBA, Art. 75). The creditor must then ask a court to set the objection aside and show that the claim is justified (ch.ch).
4. Pfändung (seizure). If you don’t object, or a court sets your objection aside, the office can seize assets and income. It can tell your employer to pay the seizable part of your salary straight to the office, and it can seize valuables to sell them at auction (ch.ch).
5. Verlustschein (certificate of loss). If the seizure does not cover the debt, the creditor receives a certificate for what is still owed, and you receive a copy (DEBA, Art. 149). You owe no interest on that amount (DEBA, Art. 149). The certificate expires after 20 years, but a new Betreibung or an acknowledgement of the debt starts the period again (Caritas).

What a seizure leaves you. Income can be seized only above what you and your family absolutely need (DEBA, Art. 93). That amount is the Existenzminimum (minimum subsistence level), and each canton sets guidelines for working it out. It includes a base amount for food, clothing and personal care, plus your rent and service charges, health insurance premiums, travel to work, meals at work and maintenance payments. Your current taxes are not included (Caritas), so plan for them with your adviser. A wage seizure lasts one year at most (DEBA, Art. 93).

If you think the office worked out your Existenzminimum wrongly, you can complain to the cantonal supervisory authority within 10 days of receiving the calculation. The complaint is free unless it is made in bad faith (Caritas).

The register. An extract from the debt collection register shows proceedings opened against you in the past 5 years. An entry is deleted automatically 5 years after the proceedings end. Before then, you can ask a creditor you have paid or reached an agreement with to withdraw the Betreibung and have the entry removed (ch.ch). The guide to ordering a debt collection extract shows how to see yours, and getting a loan with a Betreibung explains what an entry means for credit.

Ways out of debt

Which way fits depends on your budget, your debts and whether your creditors agree. A debt advice office explains each option and helps you through the process (ch.ch).

How much creditors get. No law says how much creditors must receive in a settlement. They decide whether to accept your offer, and what you can offer depends on your debts, your budget and any assets. Under the guidelines of Schuldenberatung Schweiz, a settlement should not last longer than 36 months, so your monthly surplus times 36 is what you can offer. Creditors are treated equally, apart from the ones the law puts first (Caritas).

During a court moratorium, debt collection against you stops, except for family maintenance payments (DEBA, Art. 334).

After a settlement. There is no legal right to have a paid Betreibung deleted. Before you pay, agree with each creditor that it will withdraw its Betreibungen and have them deleted free of charge. You do have a right to have a paid certificate of loss deleted from the register, so agree in writing that the creditor returns the original, marked as paid (Caritas).

Public funds. The cantons of Neuchâtel, Fribourg and Vaud have a public debt relief fund (Caritas). Ask your advice office whether it can help in your case.

Personal bankruptcy. Your assets are shared among your creditors, and they receive certificates of loss for what is still owed. Bankruptcy does not wipe out your debts. It does stop debt collection as long as you don’t come by new assets, and it ends any wage seizure, so you can use your whole salary again (ch.ch). Ask the bankruptcy office or a debt advice office about the procedure first.

A new procedure is coming, but it is not law yet. Parliament has adopted a new debt restructuring procedure for private individuals, so that people with no realistic way to repay can free themselves from their debts under certain conditions. It cannot be used yet: the cantons first need time to set up the new procedures, and the Federal Council will announce when it enters into force (Federal Office of Justice).

Should you take a loan to pay your debts?

Before a lender grants a consumer credit, it must check that you can repay it without using the part of your income that can’t be seized, your Existenzminimum. It must count your actual rent, your taxes according to the withholding tax table and the credits already recorded at the IKO, and it must assume the loan is repaid within 36 months (KKG, Art. 28). The law states the aim plainly: to avoid over-indebtedness (KKG, Art. 22).

So if your budget leaves nothing over once you have paid what you need to live, a lender that follows the law cannot lend to you. Combining debts into one loan can also take longer to pay off and cost more in total. Compare both totals, and ask a debt advice office to look at them with you before you sign anything.

Be wary of offers of a loan despite open Betreibungen and without any credit check. Swiss Crime Prevention warns that they come from dubious or even fraudulent firms: in Switzerland, every lender must check your creditworthiness by law before it lends. The guide to loans «without a credit check» explains what is true.

If you can’t pay a loan you already have

Talk to the lender before the payment is due, and ask what it can offer. The Consumer Credit Act (Konsumkreditgesetz, KKG) also sets limits:

• Ending the contract. The lender may withdraw from the contract once unpaid instalments reach 10 % of the net amount of the credit (KKG, Art. 18).
• Late interest. Interest on late payments may not be higher than the rate in your contract (KKG, Art. 18).
• The IKO. The lender must report arrears of 10 % of the net amount to the IKO (KKG, Art. 25). The guide to ZEK and IKO explains what that entry means.

If the lender should not have lent to you. A lender that seriously breaks the rules of the credit check loses the whole amount it lent, with interest and costs, and you can claim back what you have already paid. For a minor breach, it loses the interest and costs (KKG, Art. 32). If you think this applies to you, Caritas advises asking the lender in writing for the complete credit file (your application, the salary statements and the IKO extracts it obtained) and having it checked by a lawyer. If a Betreibung for the loan arrives in the meantime, file your objection within the 10 days (Caritas).

If you are a Swizeo customer and a payment is getting hard, tell us early.

Be careful with offers of quick help

Swiss Crime Prevention describes advance fee fraud as any scam in which you pay something up front to receive money, a product or a service. Once you have paid, the fraudsters disappear and deliver nothing.

Never pay a fee in advance for a loan, or for someone to clear your debts. The guide to spotting loan scams lists the warning signs.

Next step

Call the free hotline 0800 708 708, Monday to Thursday from 10:00 to 13:00, or find the debt advice office for your region on schulden.ch or dettes.ch.