The crisis is still not completely over, many companies are experiencing even lower returns due to the recession. Bodies that are still suffering from this crisis are banks, savings rates are falling and some banks are struggling to keep their heads above water. It has sometimes happened that the bank went bankrupt, just look at the DSB bank or the Lehmann Brothers. But what consequences does this have for you as a customer? More importantly, what happens to the loan that you have outstanding?
My loan if the bank goes bankrupt
Many people are curious about what will happen to your loan if your bank goes bankrupt. This is not such a weird question, after all, it often concerns somewhat higher amounts. When a bank goes bankrupt, there is a three-party relationship. The bank and the borrowers have a relationship together, the bank and the creditors have a relationship together and the borrowers and creditors have a relationship.
This one parties must sit down together to find a solution. When a bank is declared officially bankrupt, the Court of Commerce, the court that has exclusive jurisdiction in Belgium for bankruptcies, will appoint a trustee. This is the person who will act on behalf of the bank, and is therefore the only person authorized to do this. The bankruptcy trustee will look at how everyone is going to pay back his loan, he would prefer that people pay off everything immediately, but this is not possible in most cases. Not everyone is able to pay off his or her loan in one fell swoop. The receiver must therefore look for ways to collect money which he can then pay back to the creditors. The bankruptcy trustee will therefore try to collect all claims, but he will also try to redeem as many invoices as possible.
The total of all loans that are open to a bank is the source of income for this bank. The bank actually earns interest on these loans. In some cases it can happen that nothing has changed, you just continue to pay off your loan at your bank. With the money that the bank earns on this, they can give a part to the creditors. But the competition is also not crazy, many banks are interested in the loans of other banks. They also see these loans as a possible additional source of income. What the liquidator can then consider is to sell the bank’s loan portfolio to the other banks.
It is often the case that the borrower does not notice anything when a bank goes bankrupt. You have signed a contract that states what you will pay each month. This amount will not change, it is not in the contract for nothing. The terms of the loan will not change, you must still meet the obligations of the contract. This does not matter whether it is at a successful bank or at a bankrupt bank.
Savings account with a bankrupt bank
It is of course possible that, in addition to your loan, you also have a savings account with the bankrupt bank. In this situation there are slightly different rules. De Nederlandsche Bank (DNB) allowed the savings and loan amounts are settled with each other. This also applies if you have a mortgage and a savings account with the bankrupt bank. In practice this is as follows. Suppose you have a loan of 20,000 euros and a savings account of 10,000 euros with the bankrupt bank, then you have a loan of 10,000 euros.
You no longer receive your savings, your debt is simply reduced. Unfortunately, for borrowers, there will be no unexpected surprise. As a borrower, you still have to make further payments. This must be from the date of acquisition to another bank. Also, when a bank goes bankrupt, there will be no outstanding credit in which you must repay all outstanding amounts.
Attention! The savings are only guaranteed up to 100,000 euros per bank.
If you have a safe at a bank, they can not handle the money or the documents that are stored in it. That always remains your property even if the bank is bankrupt.
There are a few tips to reduce the risk of borrowing, so you will not have to hassle if the bank goes bankrupt. Even if you do not notice much, it can save you a lot of paper work.
- First, it is useful to keep the loan and the savings account separate from each other. If you already save, it is wise to spread this across multiple banks, so you reduce the loss if the bank should go bankrupt.
- Finally, it is wise to see if your banks do not belong to the same parent company, since they all go bankrupt in the event of bankruptcy.
These are some tips to prepare you for the very small chance that the bank can go bankrupt, and even if they go bankrupt, you as a borrower do not notice much of it. So do not worry so much when things get worse with the bank, it will always be fine.