Loan arrears – what to do, how to avoid interest and bad credit history

The content of the article

• What is a loan delay
• Legal regulation
• Penalties and Forfeits
• Loan arrears – bank sanctions
• What to do if a loan is past due
• 3-5 days
• Overdue loan for a month
• Overdue in a bank for more than 3 months
• Credit Refinancing – Pros and Cons
• Overdue loan restructuring
• What to do if the bank does not make concessions
• Going to court
• Declaring yourself bankrupt
• Repayment of an overdue loan

Most Russians borrowed money from the bank at least once in their lives. You can take out a loan to buy an apartment or a car, apartment or for consumer needs. As a rule, the debt is not paid immediately, but is divided into monthly payments, which are paid regularly on a certain date. Loan arrears face many consequences: the imposition of monetary fines, an increase in the size of the payment, and even legal proceedings..

What is a loan delay

An overdue loan is a debt to a bank under a loan agreement that is not paid on time. From the moment the debt arises, the bank is entitled to impose sanctions on the debtor – fines and penalties, the amount of the penalty is specified in the contract. They are not too high, but the size of the debt can increase significantly. If one-time delay in payment, the financial institution may be loyal to this. Systemic delays in making payments will lead the client to the rank of malicious defaulters and spoil his credit history.

Legal regulation

Collection of overdue debts is regulated by the Civil Code of the Russian Federation (paragraph 1, chapter 4). The delay may be threatened by the fact that the bank will require you to pay cash debt ahead of schedule with interest (Clause 2, Article 811 of the Civil Code of the Russian Federation) if the loan repayment terms have been violated. The legislation does not specify whether this is a one-time or systematic violation of payment deadlines.

If the debt is large, financial institutions will give the prerogative of debt collection to collectors, whose activities are not fully specified in the legislation. Their actions are based on the Administrative and Criminal Code of the Russian Federation, Laws 152-ФЗ dated June 27, 2006 “On Personal Data”, 218-ФЗ dated December 30, 2004 “On Credit Histories”, 127-ФЗ dated October 26, 2002 “On Bankruptcy” , 149-ФЗ “On information, information technologies and information protection”.

Penalties and Forfeits

Penalties for non-payment on the loan due date are a penalty that the bank will require from the borrower without fail. Normative justification of fines and penalties (forfeits) – Art. 330 p. 1 of the Civil Code of the Russian Federation, and their effect is spelled out in Art. 395 of the Civil Code of the Russian Federation. The penalty cannot be charged on the unpaid amount. The size of the penalty depends on the period of non-payment. For each day of delay, interest is charged from 0.05 to 2% of the amount owed. A penalty can be assigned simultaneously with a fine, which significantly increases the amount of principal repayment.

The penalty is a one-time sanction, which is applied for each delay. There are 4 types of fines:

• a percentage of the amount of debt that is accrued for each day of delay in payment;
• a fixed fine, for example – 300 rubles for each delay;
• going on increasing with a certain step (300, 500, 700 rubles for each delay in payment);
• fines are accrued as a percentage of the amount of outstanding debt;

Loan arrears – bank sanctions

Financial institutions react very harshly to late payments on loans and try to assign the highest possible amounts of forfeit:

• Sberbank assigns a penalty for each day of non-payment in the amount of 0.5% of the debt amount;
• Promsvyazbank – penalties of 0.06% daily of the amount of outstanding debt;
• Alfa Bank: for consumer loans – interest up to 2% daily, for loan obligations secured by real estate – 1%;
• UniCreditBank – 0.5% of the total debt;
• VTB 24 – 0.6% each day of non-payment of a loan;
• HomeCredit – interest is charged on the 10th day of delay and amounts to 1% per day.

What to do if a loan is past due

If you understand that for certain reasons, for example, due to illness, you cannot repay the loan on time, the first thing to do is contact the bank. Financial institutions are interested in repaying the debt and may compromise if the borrower presents sufficient grounds for not being able to pay the loan. The bank may postpone the payment date, reduce the payment amount or exempt from accrued monetary fines. This also applies to mortgages..

3-5 days

When delays arise, it is best to contact a bank employee and ask to move the payment deadlines. If a loan is delayed for a couple of days, it may not affect the credit history. If this happens all the time, the bank offers to pay a fine or a fixed penalty. Additionally, a note appears that the borrower is unreliable, this will negatively affect his reputation in a financial institution.

Overdue loan for a month

If there is a delay of a month or more, banks are actively working with defaulters – they try to contact and remind about non-payment. Do not avoid them, this will further exacerbate the situation. If you are aware when circumstances will allow you to close the debt, it is better to inform the bank staff about this. It is possible that fines or penalties for minor delays (up to a month) will not be charged.

Overdue in a bank for more than 3 months

When there is a delay in payment of the loan for more than three months, the borrower’s case is transferred to the security department, which acts more strictly. We need to start talking with the bank, the manifestation of the initiative will positively affect your cooperation. Documents are collected confirming the inability to pay the debt.

An application is submitted to the credit department with a request to avoid fines, refinancing and prolongation of debt or agreeing on the dates of repayment of debt. Employees can be loyal, especially to those who have not violated their obligations before..

Credit Refinancing – Pros and Cons

Debt refinancing is the provision of a cash loan on concessional terms to repay the main debt, for which there was a long delay in the loan, if there are good reasons for this. The bank may make concessions, because the bankruptcy of the debtor is unprofitable for him; The borrower has a good chance if he has no delays in previous loans.

The pluses include a technical reduction in interest, which leads to a decrease in regular payments and the ability to choose a credit institution with the most favorable refinancing rates. But there are also disadvantages:

• the need to again collect a package of documents;
• probable provision of additional financial guarantees to the bank;
• The procedure is subject to loans taken no more than 12 months ago.

Overdue loan restructuring

The debt restructuring procedure is carried out only in the bank where the loan was issued. If the borrower has good reasons, the financial institution can provide, as an option, loan assistance with a long delay:

• obtaining an extension of the contract, which leads to a decrease in monthly payments;
• changes in debt currency;
• credit holidays – exemption from interest or a break in the repayment schedule;
• abolition of penalties;
• interest rate reduction.

What to do if the bank does not make concessions

If negotiations with the credit manager do not give a result, and the bank requires that the full amount be returned ahead of schedule, you must contact the bank’s management in writing. The application must be accompanied by written evidence of problems that interfere with the payment of debt (for example, medical certificates). The bank may reconsider a deferred payment request. Otherwise, the bank and the borrower are awaiting trial..

Going to court

The Bank is entitled to apply to the court with a request to collect the debt from the borrower of the entire amount under the loan agreement ahead of schedule if the loan has a delay of more than three months. This happens when all other ways to agree have been exhausted, and even the actions of the collectors have failed.

With the correct execution of the loan agreement, the court awards the borrower to pay the debt forcibly and transfers the case to the bailiffs. If the contract found violations by the bank, the court may insist on early termination of the contract.

Declaring yourself bankrupt

According to the Law on Bankruptcy of Individuals No. 127-ФЗ dated June 29, 2015, the bankruptcy procedure of an individual was simplified, and the minimum amount of debts amounted to 700,000 rubles. This is not very beneficial to credit organizations, but for those who can no longer pay the debt to the bank to file for bankruptcy – a significant help on a loan with a large delay. Bankruptcy proceedings take six months or more, and the bank will oppose the decision to declare the debtor bankrupt..

Repayment of an overdue loan

When there is an overdue loan debt, it is worth trying to negotiate with the bank about debt relief. If no consensus is found, the bank will go to court to force repayment of the debt ahead of schedule. If the borrower has the opportunity, he can repay the debt ahead of schedule, for which you need to send a corresponding application to the bank and put the amount of money necessary to close the loan to the bank account.

Otherwise, a trial will take place, the borrower will be obliged to return the money to the bank by force. In court, the amount of debt may be reduced if the debtor proves insolvent. The outstanding debt is transferred to the bailiffs, who act according to the following steps:

• send to the debtor the decision to collect half the salary against the debt;
• arrest the accounts of the debtor;
• the property belonging to him is seized (when the mortgage was taken).