Debt release

Discharge of debt means that you are released from an existing financing arrangement — discharged — and no longer have to pay the monthly installment or your share.

In doing so, you can either transfer your loan completely to someone else (= debtor change) or another borrower drops out of the financing so that there is only one borrower left.

The latter is often the case when you buy a property together with your partner and it comes to separation. If one of you keeps the property, the other may not want to pay for it anymore. To do this, you must apply to the bank for a discharge of debt. And then the bank will start the examination. If it approves the application, however, the new financing amount may be higher than the actual remaining debt. This is due to the early repayment penalty that the bank charges for the discharge. As a rule, the borrower bears the costs incurred if he is released from his liability.

Important to know: The bank does not have to agree to a debt discharge. However, in certain cases, banks may refuse to release the debtor from liability or refuse to allow the debtor to switch. In such situations, they request a rescheduling of the existing loan into new financing instead.

If you have any questions or need assistance, please contact us at support@urbyo.com.