If you understand that you cannot make payments on the loan on time and in full, you should immediately contact the bank. You should not hide and hope that your debt will be forgiven and forgotten. Even if collectors do not call you and do not write from the bank, interest and fines are still accrued, the debt grows, and your credit history worsens.
The best thing to do in such a situation is to contact the lender and try to change the repayment schedule.
When can loan payments be deferred?
Mortgage borrowers , by law, have the right to temporarily reduce or stop loan payments if they find themselves in a difficult life situation. For example, they lost their job or got sick for a long time. Read more about this in the article “How to get a mortgage vacation” .
If your financial condition has deteriorated sharply during the sanctions period, you can also postpone payments on all types of loans and borrowings for up to six months. To whom and under what conditions banks, microfinance organizations (MFIs) and credit consumer cooperatives (CPCs) give deferrals, is explained in the text about credit holidays .
When your situation meets the requirements of the laws on credit or mortgage holidays, the bank does not have the right to refuse you. It is enough to apply for a grace period and provide evidence of your difficult financial situation.
In other cases, you can ask the creditor to restructure your debt.
What is restructuring?
This is a change in the schedule of payments on the loan in such a way that the installments become affordable for you. Most often, the payment is reduced by increasing the loan term – for example, from 3 to 5 or from 5 to 7 years. But the bank will not stretch your two-year loan for 20 years.
There are other options for restructuring – it all depends on the bank. For example, you may be allowed to pay only the interest on a loan for a certain period of time, or, conversely, only the principal debt.
If earlier you regularly made payments and proved to be a reliable borrower, most likely, the lender will meet you halfway. It is in the interests of the bank to help you get through the difficult period so that you can eventually repay the debt in full.
How to negotiate with the bank?
Prepare for a conversation. Collect all documents that can confirm the decrease in your income. For example, these could be:
- an order to reduce or a copy of the work book with a corresponding entry;
- certificate from the employer on the reduction of wages;
- a document from the employment center stating that you joined the labor exchange;
- a lawsuit against the employer if he delays wages;
- death certificate of the co-borrower on the loan (or a close relative who helped you pay the loan);
- sick leave for more than a month;
- an extract from the medical record, which confirms the need for expensive treatment;
- certificate of disability;
- documents showing damage to property that generated income, such as a house that you rented out;
- child’s birth certificate.
During negotiations, do not make unrealistic promises. For example, you should not agree on a delay for exactly 30 days, when there are no guarantees that during this time you will find a new job. If you do not keep your word – nothing will change in a month, and there will still be no money – most likely, the bank will no longer make concessions.
Can I take out a new loan to pay off the old one?
In most cases, this is a bad decision. Firstly, you are already in debt to one bank, and you may not be given a loan in another. Or they will, but at a higher percentage. Panicking for new loans to pay off old ones, you can end up in debt.
I was laid off at work, I’m sick. Will the law protect me?
In the case of a mortgage loan , payments on which usually eat up a large share of the family budget, the law gives you the right to a respite – mortgage holidays . But you can use them only once during the period of the loan agreement, and their maximum duration is only six months.
During the period of sanctions, the law is in force , which gives the right to semi-annual credit holidays for any loan and loan. You can take a deferment if your income for the previous month decreased by more than 30% compared to the average monthly income in 2021.
Even if you have already taken a mortgage vacation, you do not lose the right to a credit vacation. And vice versa: if you take a loan holiday, but you don’t have time to solve financial problems, you can then apply for a grace period on a mortgage. The only restriction is that you cannot write an application for a new vacation until the previous one ends.
In the case when you have already used the deferral by law, and payments remain unbearable, try to negotiate with the bank on restructuring.
Until the end of 2022, the Bank of Russia recommended that banks restructure customer debts and not impose penalties and fines on loans if the financial situation of borrowers worsened as a result of sanctions.
But even in the case when the creditor agrees to concessions, you should not expect that you will be forgiven for the debt. The loan will still have to be repaid.
My bank has lost its license. I don’t owe anyone anything else?
No, your loan will not be cancelled. Despite the revocation of your bank’s license, you must continue to repay the debt to another bank, organization or Deposit Insurance Agency (DIA) , to which all loan agreements of the old bank will pass.
New payment details will always appear on the DIA website . Just in case, it is better to keep receipts for all transfers.
If you simply stop paying on schedule, you may end up with a late fee. For more information on how to act when your lender has lost its license, read the text “My bank’s license was revoked: what to do” .
What happens if I still stop paying the loan?
The bank has the right to demand money through the court, which will make a decision and fix the amount of the debt. At the same time, the court can take into account your difficult situation and set favorable conditions for repaying the loan (for example, repaying the debt in installments).
But you could negotiate with the bank yourself to change the terms of the loan. And in the event of a court case, legal costs will also fall on you (for example, a bank may include legal costs in the amount of the recovery, and the court will take them into account). This will increase your debt.
If you do not pay even after the court decision, wait for the bailiffs. They will seize money in your bank accounts or valuable property that you have (up to the amount owed). If your debt exceeds 10,000 rubles, by a court decision, you will no longer be allowed to go abroad until you pay off.
In the case when you took out a mortgage or a car loan, get ready that you will lose your mortgaged apartment or car if you stop paying. By decision of the court, the bank has the right to sell them at auction.
If you involved a co- borrower or guarantor when applying for a loan , then first the bank will require them to pay off your debt. And if they refuse, then the creditor can sue both you and them.
Will they put me in jail for non-payment?
You can face heavy fines and even imprisonment if you cheated when you took out a loan. For example, they deliberately deceived the bank about the place of work, about income, and at the same time they were not initially going to repay the debt.
If you have a large debt (from 2,250,000 rubles), bailiffs are already trying to recover it, and you are trying to prevent them, you also face criminal liability . For example, when you hide your income and property, change your place of residence or transfer property to relatives.
What if you declare yourself bankrupt?
It’s possible. It is important to remember that bankruptcy is not a magical way to write off debts and live in peace without obligations, but an extreme measure in a deadlock situation (the house burned down, it is impossible to work due to illness). At the same time, only the essentials will be left for you, you will have to part with the rest of the property. It will be sold at auction to pay off the debt. The mortgage apartment will also be taken away, even if it is your only home.
While the bankruptcy procedure is going on, you will be banned from leaving the country. After you are declared bankrupt, you will not be able to hold leadership positions for three years. And if you want to borrow money again, within five years you will be required to inform creditors about your bankruptcy status. So the chances of getting new loans will be very small. Read more about the unpleasant consequences of bankruptcy in the article “How to declare yourself bankrupt through the courts” .
If one of the creditors has already tried to sue your debt, but the bailiffs did not find any money or valuables from you, you can go through a simplified, out-of-court bankruptcy. The features of this procedure are written in the text “How to write off debts without a trial” .
How to insure not to end up with a loan and no money?
The advice may seem obvious, but it is important to carefully calculate your strength before taking out a loan. As practice shows, most often people do not cope with debts due to the fact that they initially incorrectly assessed their capabilities, and not because of economic cataclysms.
The simplest and most important recommendations for those who plan to take out a loan:
- Don’t take too much. It is desirable that the amount of payments on all your loans does not exceed 30% of income. At the same time, the balance of money should be enough for other mandatory payments (payment of utility bills, telephone, Internet, transport) and your usual life and your family members.
- Prepare a financial airbag – at least three of your monthly income. If force majeure happens, she will help you out at least for a while.
- Think about insurance , especially when you take out a large loan for the long term. She can help you out, for example, if you get injured or become seriously ill. Depending on the terms of the contract, the insurance company will partially or completely extinguish your debt to the bank.
