A single mother falls into a debt trap after separation – due to loans. The reason: serious errors were made in granting the loan.
In brief:
- Small loans are supposed to provide relief.
- If errors are made in granting them, they quickly become a burden.
- On Nau.ch, a single mother shares how she fell into a debt trap.
- And: how she managed to get out of the debt trap.
When Beatrice Keller* was in dire straits, she took out a loan. And that’s when her financial troubles really began – a common scenario. “I was so ashamed,” she recalls.
But let’s start from the beginning.
Beatrice Keller is in her early 40s and lives in the canton of Bern – we’re using a different name to protect her privacy. After her divorce, she became a single mother. With her full-time job as a clerk and the alimony for herself and her two children, she didn’t have financial worries for a long time.
Initially, everything was fine. She met a new partner and moved into a large apartment with him. But then he left her. “He left me in the expensive apartment, which I couldn’t afford on my own.”
Cash loan as a supposed solution
To make ends meet until the lease expired, she looked for solutions. She found one on the internet through a financial institution.
She took out a cash loan. And then another, and another.
In total, the loans amounted to over $90,000.
But the relief was short-lived. Month after month, she had to repay over $1,000. With a horrendous interest rate of 13% – and for seven years.
At first, she managed to make the payments. But then her financial situation drastically changed: her ex-husband stopped paying alimony.
Although this was agreed upon during the divorce, the financial institution ignored it when granting the loan. This oversight violated legal obligations. The law states that a loan should only be granted if it does not lead to over-indebtedness.
Budget miscalculated
The lender is required to calculate a budget for the borrower. After deducting all fixed costs, there must be enough money left to pay the monthly installment, until the entire loan is repaid.
This didn’t happen in Beatrice Keller’s case.
The financial institution ignored that crucial income would be missing after a few years. They also overlooked significant expenses: child care, dining out, commuting costs, or health expenses.
It’s not uncommon for financial institutions to undercalculate budgets for people in financial distress.
Attorney Nora Goll from the Bern Debt Counseling Service explains: “Budgets are sometimes incomplete and overly optimistic.” Critical items are omitted.
“Over a long period, many unforeseen events can occur: job loss, divorce, or a death in the immediate family.” A proper budget should account for these to ensure that appropriate reserves can be set aside.
Health costs are a classic example. “Those with high deductibles and out-of-pocket costs must dig deep into their pockets if they fall ill. Another example is dental expenses, which can quickly escalate.”
Sudden termination
As if the loss of alimony wasn’t enough, Beatrice Keller faced another severe blow. This time unexpectedly. After changing jobs, her employer unfairly terminated her. She was unemployed for six months.
Her unemployment benefits were 20% less than her previous salary. This shortfall made it difficult to pay the loan installments.
The situation only improved when she sought help. She first turned to Winterhilfe, an organization that assists people in financial distress.
The organization covered one month’s rent to give her some breathing room. Then Keller was referred to the debt counseling service. They quickly identified significant issues with her loan.
It became clear: the loan should never have been granted. “I should never have received this loan,” Keller says.
The law allows for challenging invalid loans. Attorney Nora Goll explains: “In cases of minor violations, only the net loan amount, excluding costs and interest, is owed. In cases of major violations, the financial institution must repay the entire loan.”
“Finally debt-free”
Beatrice Keller wanted to avoid going to court. The financial institution also preferred to settle out of court. The two parties reached an agreement.
For the single mother, it was a huge relief. “I am finally debt-free,” she says. Her advice: “Stay away from such loans.”
For those who find themselves in a debt trap due to a loan, seeking help is essential. Beatrice is relieved: “Thanks to the help of the debt counseling service, I am now free.”
- Name changed by the editorial team.
