If you have debts and no assets, all your debts, with the exception of some government requirements, will be considered as non-priority debt and thus subject to a dividend calculation. Dividend calculation is a relative distribution of the item Allocation creditors, calculated according to the size of the debt.
If we assume that the debt arrangement goes beyond five years and the debtor complies with the debt scheme, the remaining debt after five years will be deleted in its entirety.
This means that the debtor is debt free after five years
If we change the premise from renting a home to owning a home, the result would be somewhat different. The status after the end of the debt settlement period would then be a mortgage at the equivalent of the value the home was valued at the beginning of the debt settlement period.
That is, a residual loan corresponding to the turnover value per. opening date + 10%. Debts that exceed this amount (non-priority debt) and that have not been repaid with the item 171 distribution creditors shall be deleted at the end. As a general rule, the compensation for a total damage will cover the cost of rebuilding the home to the same standard. The value is usually determined when the insurance is taken out, based on the data you provide about size, place of residence, standard, etc.
In both of these examples, wealth is basically zero
The interest rate on a variable rate loan is adjusted regularly and there is no upper or lower limit. This means that it depends entirely on the market and there can be uncertainty in it. To minimize the risk of rising interest rates, there are various products with interest rates so that the interest rate can never be higher than the ceiling agreed with the bank or mortgage institution.
This assumes that the dwelling at the end of the debt settlement period has the same turnover value as at the entrance.