Marta Łukasiewicz and Marta Czepiel for Dziennik Gazeta Prawna: “Assumption of debt strengthens the position of lenders and protects consumers.”
Lending institutions are constantly looking for flexible solutions that allow them to effectively recover receivables without excessive legal formalities. One such tool is assumption of debt, which can strengthen the position of creditors while at the same time protecting the interests of consumers. Associate Marta Łukasiewicz and Junior Associate Marta Czepiel write about this mechanism in Dziennik Gazeta Prawna. Read the article in Polish here!
Consumer credit is subject to numerous regulatory requirements designed to protect borrowers, but these also impose many formal obligations on lenders. Such standards should be applied not only when entering into credit agreements, but also in any additional arrangements made during repayment, most often related to modifying repayment terms.
Debt restructuring as a first step
When borrowers face difficulties in repaying installments on time, they may apply for debt restructuring. The Consumer Credit Act provides examples of possible restructuring measures, but the list is not closed, allowing institutions to respond flexibly to borrowers’ needs. However, not all restructurings are successful.
Assumption of debt as an additional safeguard
If restructuring fails, the lending institution may apply debt assumption by a third party. This means that a third party becomes jointly liable for the repayment of the obligation together with the original borrower. Importantly, the person assuming the debt does not become a borrower within the meaning of the Act – they do not take out a loan, but merely assume liability for repayment. As a result, the lender is not obliged to assess their creditworthiness or provide pre-contractual information.
Benefits and risks
Assumption of debt benefits both sides: it increases the lender’s chances of recovering receivables and motivates the original borrower to repay on time, offering them an additional opportunity to avoid further legal consequences. However, the lack of information obligations may lead to misunderstandings and improper performance of obligations by the assuming party.
Are restructuring agreements subject to the Consumer Credit Act? Is the person assuming the debt considered a borrower? What are the most common mistakes in debt assumption? Marta Łukasiewicz and Marta Czepiel address these and many other questions in their article published in Dziennik Gazeta Prawna.
