Additional payment obligation
The additional payment obligation is an important part of debt adjustment.
You may become subject to an obligation to make additional payments if your net income increases or you receive a one-off payment (e.g. inheritance or a lottery win) during the payment scheme. The additional payment obligation also applies to zero schemes. The additional payment obligation applies to the entire payment scheme period, including the beginning and end of an incomplete calendar year.
During the payment scheme, you must, at the creditor’s request, present an account on the additional payment obligation. The account must be submitted even if your income has not increased. At the end of the payment scheme, the creditor has the right to request an account on the additional payments obligation for a period of three months. The account must be presented without undue delay.
Your financial and debt counsellor advises and guides you in matters related to the additional payment obligation.
Increased income
The additional payment obligation is determined based on your income during a calendar year. You may become subject to the obligation if an increase in your income exceeds the EUR 2,000 threshold for additional payments. The additional payment limit is the same also during incomplete payment scheme years. In addition to taxable income, certain benefits, such as an increase in your housing allowance, are considered income as well. If your income increases during the payment scheme, always check if the threshold for additional payments is exceeded. If your income increases, prepare for possible additional payments by putting some money aside.
Your actual income will be compared to the confirmed income assessment in your payment scheme. Half of the exceeding amount must be paid to your creditors. If you are subject to additional payments, your expenses will also be reviewed.
The amount of the additional payment is calculated on the basis of final tax decisions and other receipts.
Also consider the following:
- Any tax refund is included in the income of the year when the refund was paid to you.
- Back taxes are deducted from the income of the year on which the back taxes are due to be paid.
- If you have a ‘zero scheme’, the amount of your negative available funds can be deducted from your increased income.
Creditors have the right to ask you to provide an account of your income during the payment scheme. In addition, creditors are entitled to request a district court to impose additional payments no later than two years after your payment scheme ends.
Your financial and debt counsellor will assist you in calculating the additional payments. We recommend contacting the financial and debt counselling services every year after your tax assessment for the previous year has ended. Also, always contact financial and debt counselling if you receive a request from a creditor to provide an account of additional payments.
Increased income: Example 1
The payment scheme started on 1 September 2022. In this case, increased income in September, October, November and December will be examined to determine whether there is a need for additional payments. The additional payment obligation arises if the debtor’s net income increases by more than EUR 2,000 between September and December. The debtor’s net income has been confirmed as EUR 1,500/month in the payment scheme. Their actual net income in September-December is 2,000 €/month. Their net income has increased by a total of EUR 2,000. There is no obligation for an additional payment, as the debtor’s net income has not increased by more than EUR 2,000.
Increased income: Example 2
The debtor’s payment reserve entered as negative, i.e. EUR 125/month in the payment scheme. The debtor’s net income has been confirmed as EUR 833.33/month in the payment scheme. Their net income for the calendar year is EUR 1,666.67/month. Their net income has increased by EUR 833.34/month. Their net income for the calendar year has increased by EUR 10,000.
An additional payment limit of EUR 2,000 and a negative payment reserve of EUR 1,500 per year will be deducted from the increased income. The remaining amount is EUR 6,500, half of which, i.e. EUR 3,250, must be paid to creditors, according to each creditor’s share of the debt. In this example, EUR 6,750 of the increased income will therefore remain in the debtor’s own use.
Increased income: Example 3
The debtor’s net income is EUR 1,000 per month in their confirmed payment scheme. In the next calendar year, the debtor’s net income is EUR 1,500 per month, i.e. their net income has increased by EUR 500 per month. This means their annual net income increases by EUR 6,000.
The threshold for additional payments for the calendar year EUR 2,000 is deducted from the income increase. The result is EUR 4,000 of which half, or EUR 2,000, must be paid to the creditors according to the determined shares. This means that in this example, from the EUR 6,000 increase in the debtor’s income, EUR 4,000 remains free to use by the debtor.
One-off payments
An obligation to make additional payments may be created if you receive a gift, inheritance or other one-off payment (e.g. a lottery win) during the payment scheme. The share of one-off payments that exceeds EUR 1,000 must be paid to creditors. If you receive several one-off payments during your payment scheme, you may keep up to EUR 1,000 of the payments. The payment to your creditors must be made within three months from the time you receive the one-off payment.
An inheritance may lead to an additional payment obligation if the person who left the inheritance died during the payment scheme. You must pay inheritance taxes on the inheritance first. The additional payment obligation persists even if the distribution of the estate is carried out after your payment scheme ends.
If an inheritance or other lump sum payment is greater than the total amount of the original debts listed in the payment plan, the creditors are paid the debts in accordance with the original amounts. The debtor will keep the remainder of the inheritance. After payments have been made, an appeal on the payment scheme will be filed with the District Court, which can make a decision on the termination of the payment scheme.
If you receive a one-off payment, contact financial and debt counselling. The additional payment must usually be made within three months of the receipt of the one-off payment.
One-off payments: example 1
You receive two one-off payments during the payment scheme: a gift of EUR 3,000 and EUR 5,000 in inheritance. Of the gift, you may keep EUR 1,000 and the remaining EUR 2,000 must be paid to your creditors according to the determined shares. The inheritance of EUR 5,000 must be paid to your creditors in whole.
One-off payments: example 2
You receive an inheritance during the payment scheme. After inheritance taxes and other expenses, the share of the inheritance paid to you is EUR 50,000. The total amount of debts included in the payment plan is EUR 50,000. A total of EUR 30,000 is paid during the payment scheme. Payments for a total of EUR 20,000 have been made to the payment scheme over a period of two years before receiving the inheritance. As a result, EUR 10,000 has not been paid to the payment scheme’s accrued sum.
As the inheritance is greater than the remaining accumulation, the original sums of the debts must be repaid. In this situation, a total of EUR 30,000 must be paid to the creditors, and your remaining inheritance will be EUR 20,000. After the payments have been made, a change to the payment scheme and the end of the payment scheme can be applied for prematurely.
Payment of additional payments
Additional payments should be checked annually in financial and debt advisory services, as the additional payment will be paid to creditors during the next calendar year
The payment schedule for additional payment obligations arising from increased income is agreed on with the creditor. You can pay the additional payment as a lump sum or agree on a payment plan with the creditor.
An additional payment obligation resulting from a lump sum shall be paid to the creditors within three months.
Confirming additional payments
Additional payments are usually agreed with the creditors.
In the event of a conflict situation, you and the creditor have the right to apply for a decision on additional payments from the District Court. An application for the confirmation of additional payments can only be submitted after the end of the payment scheme, i.e. the aim is that additional payment obligations would only be processed once in court. You may incur costs from the court proceedings.
You may apply for a court decision if you and your creditor cannot agree on the amount of the additional payment, for example. The creditors may apply for a court decision if you have not responded to their request to provide an account.
The creditor must submit the application without undue delay but no later than two years after the conclusion of the payment scheme. The creditor may apply for enforcement of the additional payment after the court has decided on the additional payment obligation.