April 17, 2019

The Existing Collateral in a Loan } Creditworthiness



Anyone who finds himself in the admittedly far from happy and not easy-to-act situation of the Hartz IV relation sees himself above all in society as marginal figure stamped with more or less barely existing rights. This is especially true when it comes to being classified as a recipient of just that state support as creditworthy. Anyone who needs a loan as a Hartz IV recipient, for whatever reason, usually sees himself faced with the same rejection as described above.

After all, the bank’s standardized question about existing loan collateral usually has to be answered with a very clear “no”. How should this security be offered, because it is not without reason that the Hartz IV rate defines itself as a ” basic security ” or ” subsistence minimum “. Which does not mean that you can and should get by with the money from this standard rate. Making reserves or using the cover as collateral? Not inside! Finally, the standard rate is so small that sums could be seized as part of a loan default. As good as any bank pays attention when lending, especially one thing: on the security and certainty that they receive the money plus interest from a loan business in the agreed period. A feature that is not granted to Hartz IV recipients of banks in general.

Collateral for Hart IV recipients: no !?


Basically, this is correct, because a Hartz IV receiver should have no collateral (more). Because the state support is defined to the effect that only the one who receives money, which does not have enough income or reserves, from which the necessary livelihood can be secured. So what must lead to the conclusion that a Hartz IV recipient is not creditworthy solely because of non-existent collateral and low financial resources. Stop – is that really the case? So are Hartz IV recipients basically excluded from the possibilities of borrowing? The reality is that this question can not be answered flatly with a “no” and may!

The fine difference: innocent, financial distress

 The fine difference: innocent, financial distress

But what happens if the Hartz IV recipient gets into financial distress without being guilty? For example, if the washing machine or refrigerator breaks down and needs to be repaired or even replaced? From where should the necessary financial means for a repair or replacement come in such a case? The answer to this is simple: The job center responsible for the Hartz IV beneficiary is the number one point of contact. This is where Hartz IV loans are granted and these are even interest-free. Known problem, however, is that hardly anyone has knowledge of this. Because this performance is hidden by the job centers, unfortunately, behind closed doors. Nevertheless, the following applies: It is the right of a Hartz IV recipient to apply for and receive it, should this be justified. In accordance with § 23 (1) SGB II (Social Security Code), needy applicants receive an appropriate loan from the job center in the event of an emergency. Such a loan from the Jobcenter is granted either as a cash payment in the amount of the acquisition costs or in kind.

What will happen when applying for a loan from the job center and which pitfalls may occur, you will learn shortly in Part 2 of our article on ” Credit for Hartz IV recipients” .