A crisis, a loss of income, a broken washing machine, sudden expenses for children… There are countless reasons why people reach for a loan. But while some manage to repay the loan without any problems, for others it becomes the start of a debt spiral that ends in foreclosure or loss of their home. This article is for anyone considering a loan – especially a payday loan, a minute loan with no proof of income, or a loan from a private party. We explain what definitely not to do and why.
Are you dealing with an adverse credit loan or already facing foreclosure? Take advantage of our tailored legal problem solving service. We will review the contract, suggest defenses and next steps.
Tempting advertisements are everywhere: “Minute loan without registration – money now!” “Loan for people in foreclosure – no proof of income!” “Express loan with no proof of income and no registry check – today!”
Except that in the vast majority of cases, it’s not a help, it’s a trap. At first it looks easy when the money comes to you instantly. But when it’s time to repay, you find that instead of borrowing 20,000, you owe 60,000 within a few months. How is this possible? Fine print, high APRs, penalties, chargeable reminders, and eventually foreclosure.
The story of Lucie from Olomouc is unfortunately typical. The moment she lost her job, she couldn’t manage to repay the loan from the bank. In order not to be left homeless, she arranged another loan, this time with a non-banking company. Without income verification and at 88% interest per annum. When the third loan came in, foreclosure. And then it went quickly, with most of her wages going to the bailiff and the rest not even enough for food. And yet, because of the exorbitant interest, it was usury. Lenders try to see what interest they can get away with, even though they sometimes commit illegal acts or even crimes.
If you are considering loans for borrowers, or even loans for borrowers with foreclosures, keep in mind that such offers are not a way out of the debt trap. They are part of it.
Get back to us. We can help you check the contract for any hooks or advise you on how you can defend yourself against an unfavourable loan. When it comes to debt, time plays against you. Act before it’s too late.
The advert sounds tempting: “I will lend to people in foreclosure, no records, no proof of income.” But what is the reality? No contract, or, on the contrary, a contract full of traps written in small print. Thousands of people a year encounter loan sharks who take advantage of their desperation.
The Civil Code is clear: a contract is void if, in making it, someone takes advantage of the other party’s distress, inexperience, weakness of mind, agitation or recklessness and promises or gives a performance that is grossly disproportionate to what he or she gives. In practice, however, it is difficult to challenge such a contract. If you take out a loan from a private party, you must seek any protection yourself through the courts. Moreover, you may face debt collectors who do not move within the law.
This rule is often repeated, but few people follow it. A seemingly decent contract may contain passages like, “All disputes shall be decided by arbitrator XY.” or “Interest on non-payment is 0.3% per day.” or “Guarantee of movable and immovable property without limitation.”
According to Section 1796 of the Civil Code, a negotiation on manifestly unfavourable terms may be void. But you have to prove it in court and that is not easy.
Advertisements promise phrases such as “one minute loan – money in your account immediately”, but the reality lies in the terms and conditions. If you have a loan agreement in front of you and you’re not sure what penalties, arbitration clauses, security or guarantees mean, send it to us for review. We’ll check the contract for unreasonable or risky terms and advise you whether to sign, modify or reject it.
What to look out for:
A quick fix often hides some risk. If someone lends to you without verifying your income and creditworthiness, it is not a matter of helpfulness. Rather, he doesn’t care if you don’t pay him because he has already secured penalties, sanctions or collateral.
Yetthe Consumer Credit Act explicitly says that the provider must properly assess the consumer’s ability to repay the loan. A provider who omits this step is acting unlawfully. Do not be afraid to defend yourself and try to challenge the invalidity of the contract, we will be happy to help you.
Tip: If you have a foreclosure on your account, getting a loan can be more difficult – lenders check your creditworthiness. Find out how foreclosure works and what to do if a bailiff blocks your funds in our article.
A loan for people in foreclosure may sound like help, but it’s like putting out a fire with gasoline. A loan doesn’t solve a foreclosure, it just postpones it. You borrow more money to pay off the last debt, and in a few weeks, the new debt needs to be paid off too. And the interest is rising. Beware of scams. Many loans to borrowers with foreclosures are not loans, but just an attempt to get an upfront fee from you. You’ll never see the money.
No reputable institution asks for a fee to review your application. If someone promises you a loan and asks for an approval fee, a notary fee or a guarantee, it is very often a scam.
We dealt with a client who paid CZK 5,000 to secure a loan for borrowers through an anonymous advertisement. However, she never received the loan. The provider had disappeared and the phone number was not working. Unfortunately, the police dropped the case as the perpetrator was untraceable.
If you have already taken out a loan and suspect it is unfair, contact a lawyer. In some cases, it is possible to challenge the contract for usurious terms, challenge the contractual penalties, take the contract to court for invalidity and exercise the right to withdraw from the loan agreement within 14 days (applies to consumer loans). And if you can no longer handle the situation? Insolvency is not a shame, it’s a chance to start again without debt.
You should really think twice about a loan when you are in foreclosure, because a new loan will usually only make your situation worse. Similarly, it is very risky to borrow if you do not have a stable income and are not sure that you will be able to repay. Another warning sign is that you do not know how much you will actually pay in the end, i.e. you do not know the total amount of repayments, interest or penalties. Be particularly wary if the lender does not ask you about your income or liabilities at all, as this means that they are not really concerned about your ability to repay, but about the penalties and sanctions that follow. In addition, if you don’t get to see or understand the contract beforehand, this is a clear reason for rejection.
Tip: If you’re considering a loan, it’s important to know if you’re on any debtor registers, as being on one can affect your ability to get a loan. There are several official and unofficial registers in the Czech Republic that collect information on debtors. Find out more about what registers exist, what the differences are and what to do if you find yourself in one of them in our article.
A loan can help you, but only if you know what you’re doing. Every hasty loan, every signature-backed “minute loan with no income” can cost you multiples of what you borrow. At worst, the roof over your head.
There are over 600,000 people in foreclosure in the Czech Republic. Most of them got into trouble because of one bad loan. Don’t be one of them. If you have already entered into a contract, or are about to, a consultation with a lawyer can save you from years of misery.
A loan can be helpful if you enter into it thoughtfully, understand the contract, and have a realistic repayment plan. The biggest risks are offers that promise money immediately, without proof of income, no record check, or even to people in foreclosure. This is where high interest rates, excessive penalties, upfront fees, arbitration clauses or asset guarantees are often hidden.
In 2026, the fundamental rule remains the same: don’t sign a contract you don’t understand. With consumer credit, the provider has a duty to assess your ability to repay, and if they bypass this duty, it may be important to your defence. Equally, foreclosure is usually not resolved by another loan, but rather by a legal assessment, an agreement with the lender, a defence against an unfavourable contract or, in the last resort, a bankruptcy.
If you have already signed a bad loan, don’t wait for the debt to grow with additional penalties. Prepare a contract, payment schedule and communication with the lender and take advice. The sooner you begin to address the situation, the better your chances of avoiding foreclosure or reducing the impact of a poorly set-up loan.
Technically, yes, but it’s very risky. A new loan won’t solve the foreclosure, it will just create more debt.
It may exist on its own, but the consumer credit provider must assess your ability to repay. If they don’t address income at all, it’s a warning sign.
Typically by excessive interest, high penalties, coercion, asset guarantees or terms that are very unfavourable to the borrower.
For anonymous or unverified offers, I prefer not to. An upfront fee is a common sign of fraud, especially if the loan is promised by an unknown person from the internet.
Consumer credit can be withdrawn within 14 days. However, you must follow the contract and the law.
Don’t hide from the creditor. Prepare a contract, repayment schedule, reminders and communications and have a lawyer review the matter.
Start with the CNB’s lists of regulated and registered financial market entities.
Our team of experienced attorneys will help you solve any legal issue. Within 24 hours we’ll evaluate your situation and suggest a step-by-step solution, including all costs. The price for this proposal is only CZK 690, and this is refunded to you when you order service from us.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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