A debt assumption is the assumption of the debts of a debtor through which the transferee becomes the new debtor. As a result, the entire debt relationship changes, because the first debtor is exempted from debt by taking over the debt. The second debtor, that is, the one who has taken the blame, is now burdened with this. However, in order for a debt assumption to take place and be legally effective, the creditor must first agree to it.
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Otherwise it could happen that the debt is taken over by a debtor who is already insolvent and can also meet the creditor’s claims. The consent is therefore a hedge for the creditor, because this can check the creditworthiness of the possibly new debtor and thus recognize whether the debt can be borne. As a rule, a debt assumption takes place when a debtor with his payment obligations is already in very great backlog and thus will no longer be able to pay off the claims of the creditor and also no improvement in the economic conditions of a debtor in view can be.
Debt assumption is particularly beneficial to the creditor if no collateral is deposited by the first debtor, which could be sold to pay off the debt. The assumption of debt can also take place when a debtor suddenly becomes insolvent, which may be the case, for example, in the case of disability or unemployment. However, so that the debtor does not incur any additional costs, because default interest and fees are calculated by the creditor for the absence of payments, a person agrees to take over the debt.
The assumption of debt can be decided by a contract between the old and the new debtor or by a contract between the creditor and the new debtor. The Civil Code regulates debt assumption. Among other things, § 415 reads:
Contract between debtor and transferee
(1) If the assumption of the debt is agreed by the third party with the debtor, its effectiveness depends on the approval of the creditor. Approval may only take place if the debtor or the third party has informed the creditor of the assumption of the debt. Until approval, the parties may amend or cancel the contract.
(2) If the authorization is denied, the assumption of the debt is deemed not to have taken place. If the debtor or the third party requests the creditor specifying a period for the declaration of approval, the authorization may be declared only until the expiry of the period; if it is not declared, it is considered denied.
(3) Unless the creditor has granted the approval, in case of doubt the transferee is obligated to the debtor to satisfy the creditor in due time. The same applies if the creditor denies the authorization.