Do you want to apply for a personal loan? In the vast majority of cases, there is no way around submitting an extract from the debt collection register. This is part of a comprehensive check that the credit provider uses to decide whether a loan will be granted and on what terms. Read this article to find out all you need to know about personal loans and debt collection. 

What are debt collection, seizure and certificates of loss?

A debt collection is the final demand for payment of an invoice. This happens when you fail to pay a bill after a reminder – such as rent, health insurance premiums or online purchases. The debt collection is initiated by the person or company who has invoiced you. They are called creditors. If the payment is still not made despite the debt collection order, a notification of seizure will be issued. The notification of seizure usually involves taking part of your wages to pay your debts to creditors. Debts that subsequently remain outstanding are converted into certificates of loss. This often goes hand in hand with personal bankruptcy.

How does a debt collection order affect creditworthiness?

When you apply for credit, the credit provider checks your creditworthiness. As part of the creditworthiness check, the creditor usually also takes a look at the debt collection register. This shows whether invoices have been paid or whether there are any debt collection proceedings. You will get the best offers for your personal loan if there is nothing in your extract from the debt collection register: no debt collection proceedings, no seizure order and no certificates of loss. 

Can I take out a loan despite a pending debt collection procedure?

In the case of a pending debt collection, you are unlikely to receive an offer, as the creditor will usually reject the application directly. In Switzerland, a personal loan is not possible in the case of a seizure order or certificates of loss. 

What influence does a closed debt collection procedure have on a credit application and a credit offer?

If you pay a pending invoice, your debt collection will be closed. In this case, you can obtain a loan, but often at unfavourable conditions. As each lender gives a different weighting to debt collection cases in the creditworthiness check, credit offers also vary considerably. It is therefore worthwhile to get different offers to compare.

How can I have a debt collection case removed?

Closed debt collection cases can be removed from your extract from the debt collection register earlier, provided you have paid your debt in full. However, this doesn’t happen automatically: you have to ask your creditor to remove the debt collection case at the debt collection office. In most cases, this incurs a fee. But the effort is worth it if you want to obtain a personal loan. As soon as you have no more entries in the debt collection register, your interest rates improve. 

Tip: Sample letter for withdrawal of a debt collection case

Have you repaid your debt and would you like to ask the creditor to delete the debt collection case? You can find a sample letter on the website for the Swiss Foundation for Consumer Protection. When formulating the letter, remember that you can only request the creditor to withdraw the debt collection case – you cannot force them to do so.