More than 21 million Russians are considered to be in default on their loans. The reasons for delays may be different. Lawyer Alexander Shcherbinin explains what not to do if it becomes clear that the bank has nothing to pay with.
Mistake one: avoiding contact with the bank
It seems that almost from the first days of delay, bailiffs and collectors will come running and leave the person without property. But there is always time: from several weeks to six months, depending on the type of loan. Therefore, you definitely shouldn’t go to extremes – try to ignore the problem or panic.
“A person may suddenly lose his job or become seriously ill. As soon as he realizes that it is impossible to fully fulfill his loan obligations, he needs to inform the bank about this. Perhaps the lender will accommodate you halfway and offer credit holidays or other solutions to the problem. If you are refused over the phone, do not lose hope and submit a written request in duplicate. Practice shows that in the second case the bank is ready to take into account the circumstances of the applicant,” says the lawyer.
If the borrower is in the hospital, the request can be sent through a mobile application. In especially severe cases (for example, a borrower in intensive care), relatives can also try to contact the banks and report what happened.
Mistake two: ignoring documents
An important rule when there is a risk of delay is to take an agreement with the lender and study it carefully. Most likely, along with the loan agreement, the borrower also entered into an insurance agreement – this can also be a chance to solve the problem. Dismissal, serious illness, illness of a relative, assignment of disability and other life troubles may fall under the insured event. Even if the situation is controversial, it is better to contact the insurance company in the manner specified in the policy. It may happen that the insurance will cover not only the costs of the loan, but also beyond it.
As before, all applications must be submitted in two copies: one is given to the addressee, and the second, with a receipt stamp, remains in the hands of the borrower.
Mistake three: taking out new loans to pay off old ones
This is one of the main mistakes of borrowers who have defaulted on a loan. This is how dozens of microloans taken out “before payday” appear. But the interest on them is so high that very soon a person finds himself in a debt trap.
It’s especially difficult for those who have a mortgage. But you don’t have to give up the option of selling your mortgaged apartment at the market price to pay off the loan. Often after the transaction there is money left over to buy cheaper housing or rent it for some time. It is better to pay off the debt by selling the home at the market price than to wait until the court and sell the property at auction for next to nothing.
Mistake four: transferring property to others
Fearing collections from creditors, the borrower may make rash transactions with real estate – for example, transferring it to relatives. Such “output” of objects is fraught with consequences. Lenders will easily track the borrower’s real estate transactions over the past three years and, if necessary, will be able to challenge them.
Mistake five: refusing to refinance and go bankrupt
Russians have the opportunity to declare themselves bankrupt and write off their debts. There is both a judicial route and a simplified free one. As part of bankruptcy, you can also refinance – “freeze” interest and penalties and eventually return to your usual payment schedule.
“But you must always compare your capabilities with the conditions of the creditors and carefully calculate everything. If a person has several loans, no property and no abuses on his part, then he is most likely headed for bankruptcy under the “simplified” method. Refinancing can also be a solution, but this method is not suitable for everyone. The borrower may go deeper into debt. In any case, I categorically do not advise ignoring the problem of possible delays: the sooner a person gets in touch with the creditor, the better,” sums up Alexander Shcherbinin.
This news article has been translated from the original language to English by WorldsNewsNow.com.
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