In a world full of crises and chaos, everyone wants to live with dignity. And if before it was not possible to just go and buy the necessary thing, then with the advent of loans it appeared in almost every person. But the joy of buying does not always last long, because the euphoria passes quickly when the time comes to pay the debt. Everything would be good when there is a stable income, which the borrower expected, but if there is no way to pay on loans? What to do in such a situation? This will be discussed in this article.
Reasons for insolvency of borrowers
The reasons for the lack of money can be very different - from losing a job to a serious illness. Of course, many citizens, making another purchase on credit, do not think about the bad, but hope for the best. However, another crisis may bring down all the plans of a once conscientious loan payer so that today he faces a difficult question: “There is no way to pay on loans - what should I do?” Do not despair, because there is always a way out. Moreover, according to the law, it is possible to achieve a deferred payment, or even write off a debt, depending on the reason for the lack of money.
The borrower's first steps if there is no money to pay a loan
The main thing that should be done first of all in case of financial difficulties is to urgently go to the bank in order to report this problem. Many insolvent borrowers rely on a happy chance or some kind of luck that will save them from the debt hole. In fact, there is no such magic by which the debt will simply be repaid, or it will be written off by itself in general. The more time passes, the greater the penalty for late payments. Thus, the first step is to contact your bank where the loan was issued.
Next, you need to write a statement about the impossibility of paying a loan, because, after hearing the request verbally, the bank manager may already forget about it by evening. Therefore, it is necessary to inform the creditor in writing of their financial difficulties and the desire to restructure the debt.
Debt restructuring - what is it?
Many who have been faced with obtaining a loan have heard of this concept, but few know what it is. Debt restructuring is the process of reviewing the borrower's solvency in order to reduce the burden of credit payments. Debt restructuring implies a measure aimed at changing the terms of a loan agreement for a borrower in order to maintain its ability to repay debt.
Restructuring of foreign currency loans is most often carried out by the state in crisis situations, when the majority of citizens who apply for a loan in foreign currency suffer from the debt burden.
How to achieve a loan restructuring
In order for the bank to meet the requirements of the borrower, he needs to contact his manager with a written statement as soon as possible. The application should indicate the reason why the borrower can no longer repay the loan debt within the terms established by the contract. It is also worth indicating the amount of money that can be repaid, while you should write the terms during which the financial situation can change in a positive direction. Do not write: "I lost my job, there is nothing to pay a loan." So the loan manager will not respond to the request, moreover, he can consider it a refusal of his obligations and will achieve bankruptcy of the borrower. Therefore, so that there are no contentious issues, it is better to write: "Due to unforeseen financial difficulties at work, temporarily there is no way to pay on loans." What to do next will tell the lender. It is better not to embellish the situation, but to give reliable information. Otherwise, the bank can verify the data provided by the borrower, and if they do not correspond to reality, then he will refuse to restructure the loan.
As mentioned above, restructuring of foreign currency loans is most often carried out with state assistance and it is important not to miss the time to submit an application for consideration of the agreement. Sometimes it’s too late, if you don’t contact the bank on time, then you will have to pay off high interest on foreign currency loans in full.
Loan Debt Restructuring Results
After considering the application of the borrower, the banking organization must make some decision. Typically, banks meet their customers and revise the loan agreement. Thus, the insolvent borrower has the opportunity to defer payment and the loan can not be paid for some time. Usually this period is up to three months, and then obligatory payments should follow, even in a small amount.
Restructuring a loan can only solve the financial difficulties of the payer for a short time. Sooner or later, the entire money loan debt will have to be paid, plus even additional interest, since the time to pay off the debt has increased. This measure is extreme in order not to reach the default of the loan and not to recognize the borrower bankrupt. Therefore, if it is possible to repay the loan on time, it is better to even turn to guarantors than to bring the matter to restructuring the loan debt.
When can I not pay on a loan?
Many people mistakenly believe that in case of problems, they will easily be able to refuse mandatory loan payments. Even pregnancy or maternity leave do not remove these obligations. Even illness sometimes can not cause non-payment of debt, because in such a situation the insurer assumes the obligation to repay loan payments. However, the insurance company does not always take on such obligations, and therefore the bank can meet the needs of a client who has serious health problems. In this case, the lender may offer a deferment of payments for a certain period of time until the borrower is calmly engaged in his health.
Another option, when there are many loans - there is nothing to pay, refinancing may become. That is, the borrower needs to get a new loan in order to repay the old one. But this scheme does not always work, because before issuing a cash loan, each bank studies the credit history of its customers. And if the lender sees the presence of several more outstanding loans, then he can refuse.
There is no way to pay on loans - what to do?
What to do when the bank refuses to restructure the loan, and refinancing is not available due to multiple failures of other banks. There is always a way out. Both co-borrowers and guarantors can come to the rescue in a difficult financial situation. Typically, when issuing a loan for a large purchase, the bank requires the provision of one or more guarantors, which will be a guarantee of repayment of the debt and solvency of the borrower. There is another situation when the surety also cannot repay the debt and it does not have the ability to pay loans. What to do in this case? You can declare yourself bankrupt, but then in the future it will not be possible to get a new loan. It turns out, and there is a way out - you can sell the collateral and use these funds to pay off the remaining debt.
Borrower rights
Both the bank and the borrower have their own rights that can protect in a difficult financial situation. However, they must be known in advance and familiarized with them before signing the loan agreement. Banks, wanting to get their money, sometimes resort to the help of collection agencies, which, in turn, begin to "knock out" the debt from the borrower in all possible ways, namely, they bother him at night, turn to his relatives and friends and even come to the workplace insolvent customer. Thus, violating his rights. Even without the ability to repay the required payments, the borrower has the right to complain to the organization specializing in such cases, in order to protect his reputation and the right to restful sleep.
Sometimes unscrupulous lenders do not specifically give the opportunity to repay a monthly payment to their client. For example, on the last day of debt payment, the borrower is not allowed into the bank branch (the cashier doesn’t work or for another reason), and then after the weekend or holidays, he is charged a large percentage of the penalty. The borrower must know that he has the right to repay the next payment before the last day giving him this right, and the bank must accept this payment, even if circumstances hinder it. These will be the problems of the bank.
The consequences of debt to the creditor
Sometimes you can hear bold statements: “I do not pay a loan for a year! And nothing!" This really happens, but the consequences have not yet affected such unscrupulous borrowers. Huge interest, a damaged credit history and, in the end, recognition of bankruptcy - all this can be in case of non-payment of obligatory credit payments.
In addition to penalties, the banking organization that issued the loan has the right to take back the collateral as a penalty under the loan agreement. This is also one of the common ways to get your money back. Thus, an insolvent client that fails to repay loan payments on time receives a mark on the damaged credit reputation at the Central Bureau of Credit Histories and is deprived of the right to receive new loans.
What the borrower does not need to do in a crisis
The most important thing that you do not need to do is try to hide from the bank. To the question: “I don’t pay credit, what will happen?”, We can give the exact answer: “Penalties and bad credit history”. Even if the bank cannot get through and meet with an unscrupulous debtor, then interest will continue to accumulate on its loan account, which will need to be repaid in any case.
If there are short-term financial difficulties, it is better to achieve debt restructuring or deferred payments, rather than take new loans to repay old ones. Here, each borrower must make a decision depending on the situation. After all, only he sees the solution to his problems and knows in what period they can be solved.
Simple Tips for Borrowers
Before applying for a loan at any bank, you must familiarize yourself with its terms. Further, if all the requirements presented by the bank correspond to the capabilities of the potential borrower, we can proceed to study the loan agreement. All items and annexes should be carefully studied and treated with utmost care.
All items that relate to numbers must be independently calculated using a loan calculator, because low interest rates often hide high hidden fees. Therefore, it is best to compare the conditions and rates in several banks, while do not be shy to ask the manager to calculate the required amount, as well as ask about obscure points regarding mandatory payments.
Only after a careful study of all the proposals will it be possible to protect yourself from the question: “I do not pay the loan, what will happen next?”, But boldly apply for a loan, counting on my capabilities. Also, do not refuse compulsory insurance, because, as can be seen from the above, unforeseen situations can occur. Sometimes it’s better to overpay the insurance company a little, but feel protected from temporary financial difficulties.