Blog
Attorney Milena Nowicka
What is the “de-CHF-ing” of a loan?
De-CHF-ing vs. indexed and denominated loans
What are the benefits of de-CHF-ing a loan?
What is the invalidation of a Swiss-franc loan agreement?
What are the benefits of invalidating a Swiss-franc loan agreement?
Invalidation vs. de-CHF-ing – summary
FAQ
Do you know that as a Swiss-franc borrower you have several options to improve your financial situation? You may decide to file a lawsuit seeking either the invalidation of the loan agreement or its de-CHF-ing. Each of these solutions offers a real chance to change the terms of your loan and free yourself from the obligation toward the bank. The only question that remains is which path will be better. Much depends on your individual situation. One thing is certain, however: to make the best possible decision, you must clearly understand what both invalidation and de-CHF-ing of a Swiss-franc loan agreement involve. All the necessary information can be found in this article.
The term “de-CHF-ing” – as the name suggests – means removing from your loan agreement the provisions related to the Swiss-franc currency.
This is possible because, as confirmed by current case law, most such agreements were drafted in a way that violated the principles of social coexistence and good practice. In such circumstances, the law clearly provides consumers with specific protection – such contractual provisions are deemed ineffective.
As a result, a Swiss-franc loan agreement is treated as a standard mortgage loan granted in Polish zloty (PLN). This completely eliminates currency risk. What is even more important, it is assumed that from the very beginning the loan was meant to be repaid in PLN. This has enormous significance when determining the amount still outstanding.
Swiss-franc loans existed in two forms – indexed loans and denominated loans.
An indexed foreign-currency loan is a loan granted and disbursed in PLN but indexed to the Swiss-franc exchange rate. The amount of each installment and the total amount to be repaid depend on the exchange rate specified in the agreement throughout the entire loan term.
Example contractual clause:
“Bank undertakes to make available to the Borrower an amount of […] zloty. The loan is indexed to the foreign currency CHF.”
A denominated loan is disbursed in PLN, but the amount is expressed in Swiss francs in the agreement. The funds therefore come from converting Swiss francs into PLN. The agreement specifies the amount in the foreign currency, while repayments are made in PLN. The amount of monthly payments is based on the current exchange rate and may therefore vary significantly over months and years.
Example contractual clause:
“Under the terms specified in the agreement, the Bank undertakes to make available to the Borrower a loan in the amount of ***** (in words: ***** Swiss francs).”
The type of loan matters when gathering documents and in further dealings with the bank, but it does not affect whether the loan can be de-CHF-ed. In both indexed and denominated loans, banks used prohibited contractual clauses and abused their stronger position: they transferred the entire currency risk to the borrower, failed to inform borrowers of the risks involved, or unilaterally set exchange rates based on their own tables, which they could shape almost arbitrarily. Therefore, regardless of the type of Swiss-franc loan, the mere presence of abusive clauses constitutes grounds for de-CHF-ing the agreement.
By de-CHF-ing the loan agreement, you as a borrower gain the right to have your installments calculated as if it were a standard PLN loan. The loan is treated from the outset as having been granted in PLN. This means you may receive a refund of overpaid principal-and-interest installments that were unjustly collected by the bank.
Even if your Swiss-franc loan has already been fully repaid, you still have a chance to recover part of the money. In such a case, de-CHF-ing will require the bank to refund the amount that exceeds what would have been payable after converting the loan into PLN.
Your chances of a favorable outcome are very high. According to statistics collected by Nawigator Stop Bankowemu Bezprawiu, in 2021 there were 3,492 favorable rulings for Swiss-franc borrowers. By comparison, banks won only 90 cases.
If you decide to seek invalidation, the loan agreement will be treated as if it had never been concluded.
This means that the bank will be obliged to return all amounts you paid – commissions, loan costs, principal-and-interest installments, etc. On your side, you will be required to return to the bank the amount of the loan principal that was paid out.
It can therefore be said that this situation is analogous to receiving an interest-free loan. If the bank paid you, for example, PLN 200,000, then upon invalidation you only need to return that amount.
Invalidating the agreement is certainly beneficial for you as a borrower – you only have to return the principal actually paid by the bank (without interest, fees, or commissions).
For example, if the bank lent you PLN 200,000 and has already received PLN 250,000 from you, then in effect you return the loan amount to the bank, and the bank returns PLN 250,000 to you. As a result, not only will you have the funds to repay the entire obligation to the bank, but you will also keep PLN 50,000 in your account. Moreover, you may claim statutory interest on the amount specified in the lawsuit, which will further increase the final amount paid to you.
It is also worth noting that your claim for a refund is independent of the bank’s claim. If you seek invalidation of the agreement and recovery of the amounts paid, the bank must return the full amount. Any claim by the bank for the equivalent of the loan principal is a separate matter that the bank must pursue on its own. Usually, before the bank asserts its claim, you already have the full recovered amount in your account, and you can use part of that money to repay the bank. The law also allows the performance of the obligation to be spread into installments.
This is not the end of the benefits – by invalidating the loan, you will not only rid yourself of the negative consequences of an agreement containing unfavorable clauses, but, equally important, you will remain the owner of the property free of encumbrances and regain your creditworthiness.
It should be noted, by the way, that after numerous losses in Swiss-franc cases, banks have begun filing lawsuits seeking so-called remuneration for the use of loan capital. However, in light of current rulings of the Court of Justice of the European Union and Polish courts, such claims should not be considered justified.
If you decide to de-CHF a Swiss-franc loan agreement:
Invalidation of a Swiss-franc loan agreement, in turn, means:
In most cases, invalidation of the loan agreement will be more beneficial than de-CHF-ing. Remember, however, that each case is individual, so it is worth seeking the assistance of a lawyer who will propose the best solution. Swiss-franc loan cases require appropriate expertise, familiarity with documentation, and the ability to analyze each case separately.
What does de-CHF-ing a loan involve?
De-CHF-ing involves removing from the agreement prohibited clauses related to converting the obligation using the CHF exchange rate. It therefore means treating the loan as if it had been granted and repaid in PLN from the very beginning.
How can a loan be de-CHF-ed?
To de-CHF a loan, it is necessary to demonstrate before a court that the agreement contained so-called abusive clauses (prohibited contractual provisions that grossly violate consumer interests). These include provisions that transferred the entire currency risk to the consumer or allowed the bank to independently and almost arbitrarily set buying and selling exchange rates.
How should one prepare for invalidating a Swiss-franc loan agreement?
To invalidate or de-CHF a Swiss-franc loan, the first step is to gather documents such as the agreement, regulations, and annexes signed with the bank. Based on these documents, it must be determined whether they contain prohibited clauses that may constitute grounds for invalidation or de-CHF-ing. The next step is to determine the amount that can be claimed from the bank and prepare a lawsuit for payment.
Is it worth converting a Swiss-franc loan into PLN?
Many people treat the terms “conversion” and “de-CHF-ing” as synonyms. In fact, they are two completely different concepts. De-CHF-ing means treating the agreement as if it had always been a PLN loan. Conversion, on the other hand, involves changing the remaining obligation into PLN at the current exchange rate. It is therefore a form of settlement with the bank and, from the borrower’s perspective, is a far less beneficial solution than de-CHF-ing, let alone invalidation of the agreement.
