Quick Summary
Debt restructuring (German: Umschuldung) is replacing existing loans with a new loan at better terms. It can save interest, lower monthly payments, or simplify multiple loans. Especially with falling interest rates or improved creditworthiness, restructuring is often worthwhile.
Definition in Detail
In debt restructuring, an existing loan is paid off early with a new loan. The new loan typically offers:
- Lower interest rates than the old loan
- Better terms (e.g., early repayment rights)
- Consolidation of multiple loans into one
- Adjustment of term to current needs
Reasons for Debt Restructuring
Interest Savings
Interest rates have fallen or your creditworthiness has improved – you can now get better terms than when you originally signed.
Consolidate Loans
Multiple loans are combined into one – this saves fees and simplifies administration.
Replace Overdraft
The expensive overdraft credit (often over 10% interest) is replaced with a cheaper installment loan.
Adjust Payments
Monthly burden is adjusted to changed circumstances (e.g., lower payment after salary reduction).
Calculation Example: Restructuring Pays Off
| Parameter | Old Loan | New Loan |
|---|---|---|
| Remaining Debt | EUR 15,000 | EUR 15,000 |
| Remaining Term | 36 months | 36 months |
| Fixed nominal rate | 9.9% | 5.5% |
| Monthly Payment | EUR 483 | EUR 453 |
| Remaining Interest | EUR 2,399 | EUR 1,306 |
| Savings | none | approx. EUR 1,093 |
Note: The figures are our own annuity calculation (as of August 2026), not a bank offer. Add the early repayment compensation: for an installment loan with more than a year left, Section 502 (3) BGB caps it at 1 percent of the amount repaid, here EUR 150. Savings after deduction: approx. EUR 943.
Debt Restructuring Process
- 1Take inventory: List current loans with remaining balance, interest rate, and remaining term.
- 2Compare offers: Get multiple loan offers and compare with current costs.
- 3Calculate costs: Consider early repayment penalty and any fees.
- 4Apply for new loan: Specify payoff as the purpose of use.
- 5Pay off old loans: The new bank transfers directly to the old lenders.
Frequently Asked Questions
When is debt restructuring worthwhile?
Debt restructuring is worthwhile when the new interest rate is at least 1-2 percentage points lower, with high remaining debt (over EUR 5,000), or when you want to consolidate several expensive loans into one cheaper one.
What costs are involved in debt restructuring?
For an installment loan the bank may charge an early repayment compensation on the loan you pay off. Under Section 502 (3) of the German Civil Code (BGB) this is capped at 1 percent of the amount repaid early, at 0.5 percent if less than one year of the term remains, and never more than the interest you would still have paid. Mortgage loans are not covered by this cap. A processing fee on the new loan is not permitted since the Federal Court of Justice ruling of 13 May 2014 (XI ZR 405/12). Mortgages may involve notary and land registry costs.
Can I restructure any loan?
In principle, yes. For installment loans, early repayment is legally regulated. For mortgages, restructuring without penalty is only possible after the fixed interest period expires or after 10 years (§ 489 BGB).
How does debt restructuring work in practice?
You apply for a new loan and specify payoff of existing loans as the purpose. The bank transfers the amount directly to the old bank or to you. The old loans are thereby repaid.
Does debt restructuring affect my credit score?
In the short term, the score may decrease slightly (new credit inquiry). In the long term, creditworthiness usually improves as there are fewer open loans and the overall burden decreases.
Legal Notice
General consumer loans such as installment loans may be repaid early at any time under Section 500 (2) of the German Civil Code (BGB); Section 502 (3) BGB then caps the early repayment compensation at 1 percent of the amount repaid early, or 0.5 percent if no more than one year of the term remains. For fixed-rate real estate consumer loans, early repayment during the fixed-rate period is only possible with a legitimate interest (Section 500 (2) sentence 2 BGB) and the cap does not apply; ten years after full disbursement, Section 489 (1) no. 2 BGB grants a right to terminate with six months notice. As of August 2026. This page is not legal advice.