What to do when there is nothing to repay a loan?

You can cope with the credit burden, even if at the moment there is no money to pay for debts. It is important at this moment not to give in to panic and trust the communications of numerous scammers to “write off debts”. There are legitimate and specific ways to solve problems with loans.

First, you must notify the bank of the current situation and loss of income. If your loan does not meet the parameters defined by the law on “credit holidays” or you do not meet all the criteria set by the law, it makes sense to apply to the bank to change the terms of the agreement: to grant a deferred payment on the loan or to restructure the loan.

Postponement

The mandatory monthly payment is reduced, and only interest on the loan is payable during the deferral. Repayment of the principal debt is deferred for the period specified by the borrower and the bank in the agreement.

Restructuring

The amount of the monthly payment is reduced by increasing the loan term. You will have to pay less, but for longer, as a result of which the total amount of interest for the entire loan period will increase.

In the application, the bank must specify that you are not renouncing your obligations, are ready to pay in the future, and the situation with non-payment is temporary due to the loss of earnings or a sharp decline in income. Please note to bankers that you are asking to prevent your bankruptcy as an individual. The application must be sent to the bank’s legal or postal address indicated on its official website by a valuable letter with an attachment description. The application can be submitted at the bank’s office, but then you should prepare a copy of it, on which the bank employee will mark that the application has been received.

Evidence of a difficult financial situation may include:

  • A document of dismissal (an order or a copy of the employment record with a record of dismissal)
  • Document from the employment center about the registration
  • Sick leave or medical certificate of illness
  • A document confirming the dependent status of disabled persons

Income statement

The request must clearly state what type of service you want to receive from the bank. Banks are not interested in problem debts and offer various options for resolving the problem based on the financial situation of the borrower.

When making a loan agreement, banks often impose to purchase an insurance policy in case of job loss or health problems, in this situation, it can become a lifeline. If such insurance is available, then all expenses for debt recovery will fall on the shoulders of the insurance company. However, it is necessary to carefully study the insurance contract itself, the conditions for the occurrence of an insured event, age restrictions, and whether there is a temporary deductible.

If an insured event occurs, you can contact the insurance company with documents confirming the insured event and the insurance company is obliged to pay off the loan.