Whether you have requested a loan or credit, you have to pay it off. What if any circumstances arise and you don’t have the money to pay your debt?

If your income has decreased, you have an unexpected expense or you lose your job, there is no need to panic. This situation is solvable. It is much easier if you are not already in arrears. In any case, even if you are already in arrears, the first thing you should do is contact the organisation that gave you the loan. Don’t worry, communicate honestly, as this strategy can solve your problem. There are several options that microfinance organisations and banks can offer you.

Extend the term

If you apply early, before the due date, this option will save you time and allow you to pay off your debt later. You will have to make a small payment to the lender to extend the term.

Debt Restructuring

Debt restructuring is a process when a microfinance organisation or bank changes the terms and conditions of a contract. By making concessions to the borrower, the organisation can change the order and term of debt repayment, its amount and others. In accordance with the basic rules of protection of the rights and interests of the borrower, the borrower can expect a full or partial cancellation of accrued interest, a reduction or complete elimination of the amount of penalties. You may be offered a deferral or extension of payments.

Loan repayment holiday

This is one of the best solutions if the loan amount is large. This option allows you not to repay the debt for a certain period of time, which is usually a few months. During this period, you will have to improve your financial situation so that you can start repaying the debt on time in the future.

Refinancing the debt

With this option, you will be able to make lower payments than in the original contract, but the term of the loan will be extended. In some cases, this method may result in an overpayment.

Sale of property

If you are in a difficult situation and do not see the possibility of repaying the loan in the future, the property will be sold if it was provided as collateral. In the case of a secured loan, you will not lose your property if you have paid 90 per cent of the debt or more.

What should you do if you can`t make your loan payments?

It is always better not to let the situation get out of hand and hide from the organisation that gave you the loan or credit. Also avoid late payments. Loans or credits not paid on time will lead to fines and penalties, the debt will increase and then it will be even more difficult to cope with the problem. 

If you forgot about a loan or missed a payment and are contacted by the delinquency department, answer the call. Even if you have missed a payment date, it is best to recognise this now so that the problem can be resolved without going to court.

Remember that banks and microfinance organisations are interested in helping you and changing the terms of financing in case of unforeseen situations.