Assumption of debt / Debt assumption

During the assumption of the debt, someone else pays the debt to the credit provider instead of the borrower.

Debt assumption is a contractual "personal exchange" solution. Similar to assignment.

Debt assumption can be established in the framework of a loan transaction. In such cases, among the contracting parties, the creditor and the borrower agree with a third party that this third party will assume the debt. After that, it is this third party who fulfills the borrower's debt to the creditor.

Compared to the original contractual status, the original borrower is therefore replaced by someone else. The person obliged to repay the loan changes. From this point on, this third party will pay the debt.

It is important that the consent of the creditor and the new obligee is required in any case for a change in the identity of the borrower. That is why the debt assumption is a tripartite agreement signed by all parties involved.

From when the agreement on assuming the debt is born 

The creditor can only demand the payment of the debt from the person accepting the debt,

The transferee is entitled to all the rights that the borrower had against the creditor based on the contract,

The guarantee to that point will cease. For example, a guarantee can be such a liquidating collateral. An exception to such a case may be if the provider of the collateral agrees to the existence of these collaterals. 

The new obligee can file a so-called reimbursement claim against the original borrower. The new debtor can ask the original borrower to pay him the amount he paid. You can do this if you have already paid the assumed debt.

In the case of credit agreements, the assumption of debt is subject to individual assessment. One of the conditions for the assessment is that the transferee is classified as a creditworthy debtor. Debt assumption is usually possible against payment of a fee. The amount of the fee is included in the bank announcements and condition lists.