I can't pay my loans, what should I do? Loan debt restructuring

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In a world full of crises and chaos, everyone wants to live with dignity. And if earlier it was not possible to just go and buy the necessary thing, then with the advent of loans, almost every person has it. But the joy of buying does not always last long, because the euphoria quickly passes when the period for paying off debts comes. Everything would be fine when there is a stable income, which the borrower was counting on, 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 job loss to a serious illness. Of course, many citizens, making out another purchase on credit, do not think about the bad, but hope for the best. However, the next crisis can bring down all the plans of the once conscientious credit payer so that today he faces a difficultquestion: "There is no way to pay on loans - what to do?" Do not despair, because there is always a way. Moreover, according to the law, it is possible to achieve a deferred payment, or even write off the debt, depending on the reason for the lack of money.

The first steps of the borrower, if there is no money to pay the loan

The first thing to do when financial difficulties arise is to urgently go to the bank in order to report this problem. Many insolvent borrowers are hoping for a stroke of luck or some kind of good fortune to get them out of debt. In fact, there is no such magic by which the debt will be paid off just like that, or it will be written off on its own. The more time passes, the greater the pen alty 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 the loan, because, after listening to the request orally, the bank manager may already forget about it by the evening. Therefore, you should inform the creditor in writing about your financial difficulties and about the desire to restructure the debt.

Debt restructuring - what is it?

Many who have had to deal with obtaining a loan have heard of such a concept, but few know what it is. Debt restructuring is a procedure for reviewing the borrower's solvency in order to reduce the burden of loan payments. Debt restructuringimplies a measure aimed at changing the terms of the loan agreement for the borrower in order to maintain its ability to repay the debt.

Restructuring of foreign currency loans is most often carried out by the state in crisis situations, when the majority of citizens who have taken out a loan in foreign currency suffer from a debt burden.

How to achieve loan restructuring

In order for the bank to meet the needs of the borrower, he needs to contact his manager with a written application as soon as possible. The application should indicate the reason why the borrower cannot further repay the loan debt within the time limits established by the agreement. It is also worth indicating the amount of money that can be repaid, while writing the time frame during which the financial situation can change in a positive direction. You should not write: “I lost my job, I have nothing to pay the loan with.” So the credit manager will not respond to the request, moreover, he may consider this a waiver of his obligations and achieve bankruptcy of the borrower. Therefore, in order to avoid controversial issues, it is better to write: “Due to unforeseen financial difficulties at work, it is temporarily not possible to pay on loans.” The lender will tell you what to do next. It is better not to embellish the situation, but to give reliable information. Otherwise, the bank can check the data provided by the borrower, and if they do not correspond to reality, then it will refuse to restructure the loan.

As it was saidabove, the restructuring of foreign currency loans is most often carried out with state assistance, and here it is important not to miss the time to apply for consideration of the contract. Sometimes it is too late, if you do not contact the bank in time, then high interest on foreign currency loans will have to be repaid in full.

Results of loan debt restructuring

After considering the borrower's application, the banking organization must make some decision. Typically, banks go to 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 mandatory payments must follow, even in a small amount.

Loan restructuring can only solve the financial difficulties of the borrower for a short time. Sooner or later, all the debt on the money loan will have to be repaid, plus additional interest, as the time to pay off the debt has increased. This measure is extreme in order not to reach a default on the loan and not to declare the borrower bankrupt. Therefore, if it is possible to repay the loan on time, it is even better to turn to guarantors than to bring the matter to the restructuring of the debt on the loan.

When can I not pay the loan?

Many people mistakenly believe that in case of problems, they can easily refuse mandatory loan payments. Even pregnancy or maternity leave is not removedthese obligations. Even illness sometimes cannot cause non-payment of debt, because in such a situation the insurer assumes obligations 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 he alth problems. In this case, the lender may offer to defer payments for a certain period of time, while the borrower can take care of his he alth.

Another option, when there are a lot of loans - there is nothing to pay, refinancing can become. That is, the borrower needs to take out a new loan in order to pay off the old one. But this scheme does not always work out, 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 may refuse.

No ability to pay 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. Usually, when applying for a loan for a large purchase, the bank requires the provision of one or more guarantors, which will be a guarantee of debt repayment and the borrower's solvency. There is another situation when the guarantor also cannot repay the debt and he does not have the opportunity to pay on 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 that there is a way out - you can sell the collateral and pay off the rest of the debt with these funds.

Rights of the borrower

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 even 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 disturb him at night, turn to his family and friends, and even come to the workplace insolvent client. Thus, violating his rights. Even without being able to repay the required payments, the borrower has the right to complain to an organization specializing in such cases in order to protect his reputation and the right to restful sleep.

Sometimes unscrupulous creditors deliberately do not give the opportunity to repay the monthly payment to their client. For example, on the last day of paying the debt, the borrower is not allowed to enter the bank branch (the cash desk is not working or for another reason), and then after weekends or holidays they charge him large interest on the pen alty. The borrower must know that he has the right to repay the next payment before the last day that gives him this right, and the bank must accept this payment, even if circumstances prevent this. This will be the bank's problems.

Consequences of debt to the creditor

Sometimes you can hearbold statements: “I don’t pay a loan for a year! And nothing! This really happens, but the consequences simply have not yet affected such unscrupulous borrowers. Huge interest, damaged credit history and, in the end, bankruptcy - all this can happen in case of non-payment of mandatory loan payments.

In addition to pen alties, the banking organization that issued the loan has the right to take the collateral as a pen alty under the loan agreement. This is also one of the common ways to get your money back. Thus, an insolvent client who has not repaid loan payments on time receives a mark from the Central Bureau of Credit Histories about a damaged financial reputation and loses the right to receive new loans.

What not to do for a borrower in a crisis

The most important thing not to do is try to hide from the bank. To the question: “I don’t pay a loan, what will happen?”, You can give the exact answer: “Fine and damaged credit history.” Even if the bank cannot get through and meet with an unscrupulous debtor, 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 taking new loans to pay off 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 need to read its terms and conditions. Further, if all the requirements that the bank makes correspond to the capabilities of the potential borrower, you can proceed to study the loan agreement. All items and applications should be carefully studied and treated with the utmost care.

All items that relate to numbers must be calculated independently using a loan calculator, because low interest rates often hide behind high hidden fees. Therefore, it is best to compare the conditions and rates in several banks, and do not hesitate to ask the manager to calculate the required amount, as well as ask about unclear points regarding mandatory payments.

Only after a careful study of all the proposals, it will be possible to protect yourself from the question: "I'm not paying a loan, what will happen next?", But boldly apply for a loan, relying on your capabilities. Also, do not refuse compulsory insurance, because, as can be seen from the above, unforeseen situations can happen. Sometimes it's better to overpay the insurance company a little, but feel protected from temporary financial difficulties.