We tell you what to do in such a situation.
If you realize that you cannot make payments on the loan on time and in full, you need to contact the bank immediately. Do 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 is growing, the credit history is deteriorating.
The most correct thing in such a situation is to contact the lender and try to change the repayment schedule.
In what cases can I postpone loan repayments?
Mortgage borrowers are legally entitled to reduce or terminate loan payments for a while if they find themselves in a difficult life situation. For example, you lost your job or got sick for a long time.
If your financial condition has deteriorated sharply during the sanctions period, you can also postpone payments on all types of loans and loans for up to six months. To whom and under what conditions banks, microfinance organizations (MFOs) and credit consumer cooperatives (CPC) give deferrals, it is explained in the text about credit holidays.
When your situation meets the requirements of the laws on credit or mortgage holidays, the bank has no right to refuse you. It is enough to apply for a grace period and provide proof of your difficult financial situation.
In other cases, you can ask the lender to restructure your debt.
What is restructuring?
This is a change in the payment schedule for the loan so that the contributions become within your power. 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 the loan for a certain 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 overcome a difficult period so that in the end you can repay the debt in full.
How to negotiate with the bank?
Prepare for the conversation. Collect all the documents that can confirm the decline in your income. For example, it can be:
Is it possible to take out a new loan to repay the old one?
In most cases, this is an unfortunate decision. Firstly, you already owe money to one bank, and you may not get a loan from another. Or they will, but at a higher percentage. If you grab new loans in a panic to pay off the old ones, you can get bogged down in a debt pit.
I got 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 validity period of the loan agreement, and their maximum duration is only six months.
During the sanctions period, there is a law that gives the right to a six-month credit vacation for any loan and loan. You can take a deferral 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 credit vacation, but do not have time to solve financial problems, you can then apply for a grace period on a mortgage. The only restriction is that you cannot apply for a new vacation until the previous ones are over.
If you have already used the deferral according to the law, and the payments remain unaffordable, try to negotiate with the bank on restructuring.
But even if the lender agrees to make concessions, you should not expect that you will be forgiven the debt. The loan will still have to be repaid.
My bank lost its license. I don't owe anyone anything anymore?
No, your loan is not cancelled. Despite the revocation of your bank's license, you are obliged to continue to repay the debt to another bank, organization or Deposit Insurance Agency (DIA), to which all loan agreements of the old bank will be transferred.
New payment details must 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 payment penalty.
What will happen if I still stop paying off 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 may take into account your difficult situation and appoint lenient conditions for repayment of the loan (for example, to repay the debt in parts).
But you could have negotiated with the bank yourself to change the terms of the loan. And in the case of a court, you will also incur legal costs (for example, the bank may include legal expenses in the amount of the recovery, and the court will take them into account). The amount of your debt will increase at the same time.
If you do not pay after the court decision — wait for bailiffs. They will seize the money in your bank accounts or valuable property that you have (within the amount owed). If your debt exceeds the specified amount, by a court decision, you will no longer be released abroad until you pay off.
In the case when you took out a mortgage or a car loan, be prepared that you will lose your mortgaged apartment or car if you stop paying. By a court decision, the bank has the right to sell them at auction.
If you engaged a co-borrower or a guarantor when applying for a loan, then first the bank will require them to repay 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 may face heavy fines and even imprisonment if you cheated when you took out a loan. For example, they deliberately deceived the bank about their place of work, about their income, and at the same time they initially did not intend to repay the debt.
If you have a large debt, bailiffs are already trying to collect 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 real estate to relatives.
And if you declare yourself bankrupt?
It's possible. It is important to remember that bankruptcy is not a magic way to write off debts and live peacefully without obligations, but an extreme measure in a dead—end situation (a house burned down, it is impossible to work due to illness). At the same time, you will be left with only basic necessities, you will have to part with the rest of the property. It will be sold at auction to repay the debt. The mortgage apartment will also be taken away, even if it is your only home.
While the bankruptcy procedure is underway, you will be banned from leaving the country. After you are declared bankrupt, you will not be able to hold senior positions for three years. And if you want to borrow money again, you will be required to inform creditors about your bankrupt status within five years. So the chances of getting new loans will become very small. Read more about the unpleasant consequences of bankruptcy in the article "How to declare bankruptcy through the court."
If one of the creditors has already tried to sue you for a debt, but the bailiffs did not find any money or valuables with you, you can go through a simplified, out-of-court bankruptcy.
How to insure yourself so as not to end up with a loan and without 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 misjudged their capabilities, and not because of economic cataclysms.
The simplest and most important recommendations for those who plan to take out a loan:
Remember that it will not work to take a loan and simply not give it back. Sooner or later, voluntarily or forcibly, the debt will have to be paid off.
If you realize that you cannot make payments on the loan on time and in full, you need to contact the bank immediately. Do 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 is growing, the credit history is deteriorating.
The most correct thing in such a situation is to contact the lender and try to change the repayment schedule.
Mortgage borrowers are legally entitled to reduce or terminate loan payments for a while if they find themselves in a difficult life situation. For example, you lost your job or got sick for a long time.
If your financial condition has deteriorated sharply during the sanctions period, you can also postpone payments on all types of loans and loans for up to six months. To whom and under what conditions banks, microfinance organizations (MFOs) and credit consumer cooperatives (CPC) give deferrals, it is explained in the text about credit holidays.
When your situation meets the requirements of the laws on credit or mortgage holidays, the bank has no right to refuse you. It is enough to apply for a grace period and provide proof of your difficult financial situation.
In other cases, you can ask the lender to restructure your debt.
What is restructuring?
This is a change in the payment schedule for the loan so that the contributions become within your power. 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 the loan for a certain 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 overcome a difficult period so that in the end you can repay the debt in full.
How to negotiate with the bank?
Prepare for the conversation. Collect all the documents that can confirm the decline in your income. For example, it can be:
- a reduction order or a copy of the employment record with the corresponding entry;
- a certificate from the employer about a salary reduction;
- a document from the employment center that you joined the labor exchange;
- a lawsuit against the employer if he delays the salary;
- 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 a medical record that confirms the need for expensive treatment;
- certificate of disability;
- documents on damage to property that brought income, for example, the house that you rented out;
- the child's birth certificate.
Is it possible to take out a new loan to repay the old one?
In most cases, this is an unfortunate decision. Firstly, you already owe money to one bank, and you may not get a loan from another. Or they will, but at a higher percentage. If you grab new loans in a panic to pay off the old ones, you can get bogged down in a debt pit.
I got 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 validity period of the loan agreement, and their maximum duration is only six months.
During the sanctions period, there is a law that gives the right to a six-month credit vacation for any loan and loan. You can take a deferral 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 credit vacation, but do not have time to solve financial problems, you can then apply for a grace period on a mortgage. The only restriction is that you cannot apply for a new vacation until the previous ones are over.
If you have already used the deferral according to the law, and the payments remain unaffordable, try to negotiate with the bank on restructuring.
But even if the lender agrees to make concessions, you should not expect that you will be forgiven the debt. The loan will still have to be repaid.
My bank lost its license. I don't owe anyone anything anymore?
No, your loan is not cancelled. Despite the revocation of your bank's license, you are obliged to continue to repay the debt to another bank, organization or Deposit Insurance Agency (DIA), to which all loan agreements of the old bank will be transferred.
New payment details must 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 payment penalty.
What will happen if I still stop paying off 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 may take into account your difficult situation and appoint lenient conditions for repayment of the loan (for example, to repay the debt in parts).
But you could have negotiated with the bank yourself to change the terms of the loan. And in the case of a court, you will also incur legal costs (for example, the bank may include legal expenses in the amount of the recovery, and the court will take them into account). The amount of your debt will increase at the same time.
If you do not pay after the court decision — wait for bailiffs. They will seize the money in your bank accounts or valuable property that you have (within the amount owed). If your debt exceeds the specified amount, by a court decision, you will no longer be released abroad until you pay off.
In the case when you took out a mortgage or a car loan, be prepared that you will lose your mortgaged apartment or car if you stop paying. By a court decision, the bank has the right to sell them at auction.
If you engaged a co-borrower or a guarantor when applying for a loan, then first the bank will require them to repay 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 may face heavy fines and even imprisonment if you cheated when you took out a loan. For example, they deliberately deceived the bank about their place of work, about their income, and at the same time they initially did not intend to repay the debt.
If you have a large debt, bailiffs are already trying to collect 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 real estate to relatives.
And if you declare yourself bankrupt?
It's possible. It is important to remember that bankruptcy is not a magic way to write off debts and live peacefully without obligations, but an extreme measure in a dead—end situation (a house burned down, it is impossible to work due to illness). At the same time, you will be left with only basic necessities, you will have to part with the rest of the property. It will be sold at auction to repay the debt. The mortgage apartment will also be taken away, even if it is your only home.
While the bankruptcy procedure is underway, you will be banned from leaving the country. After you are declared bankrupt, you will not be able to hold senior positions for three years. And if you want to borrow money again, you will be required to inform creditors about your bankrupt status within five years. So the chances of getting new loans will become very small. Read more about the unpleasant consequences of bankruptcy in the article "How to declare bankruptcy through the court."
If one of the creditors has already tried to sue you for a debt, but the bailiffs did not find any money or valuables with you, you can go through a simplified, out-of-court bankruptcy.
How to insure yourself so as not to end up with a loan and without 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 misjudged 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 advisable that the amount of payments on all your loans does not exceed 30% of income. At the same time, the remaining money should be enough for other mandatory payments (utility bills, telephone, Internet, transport) and your normal life and your family members.
- Prepare a financial safety cushion — 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 a long time. It can help you out, for example, if you get injured or get seriously ill. Depending on the terms of the contract, the insurance company will partially or completely repay your debt to the bank.
Remember that it will not work to take a loan and simply not give it back. Sooner or later, voluntarily or forcibly, the debt will have to be paid off.