What happens in case of unpaid ? The point on the possibilities in case of problem to repay a loan.
What to do in case of non-payment of a monthly loan?
A credit is for life or almost. We are committed to repaying over several years a loan granted by a bank, despite all the uncertainties of life. But precisely, life is made of highs and lows, and it happens, sometimes, that we can no longer pay his monthly credit. What can happen if we can no longer repay the credit institution, and above all, how to get out of it?
There you go, this month, we can not pay all the bills. This time, it’s impossible to pay the monthly loan, despite all the precautions taken before making a loan. What to do now ? Will the bailiffs come to the house to take everything? Depending on the type of credit, several situations are possible.
There are various subtleties to know, starting with the differences between a consumer credit and a mortgage. We will start with the simplest payment incident, when the credit agreement already foresees a possible problem of payment, at the most complicated, when one is on the verge of personal bankruptcy.
The credit institution has the right to demand full repayment of the remaining amounts to be repaid, together with interest. For the borrower, it is a disaster, to avoid absolutely, but fortunately, before arriving at the incident of payment then with the decay of the term, one can find a solution. The overdraft authorization is a (large) service that a bank can offer to its customers. The bank allows the account to be debtor, negative. Payments are made, within the limit of overdraft authorized. This overdraft limit is to be negotiated with its banker at the time of the activation request of the overdraft authorized: it is normally a lower limit than the monthly salary.
The overdraft is besides “plebiscite” by the French: in 2016, 2 French out of 5 have at the end of each month a negative balance!
This is the simplest solution for those who have it. There is nothing to do ! The bank takes the money from the credit, the account is left with a negative balance until the next money comes in, then, we pay the agios. This is where you can make a choice: is it better to pay the agios of overdraft authorized, or is it better to postpone the monthly payment? The postponement of monthly payment also having a cost, I find, for my part, that it is not useful not to take advantage of his overdraft authorized. It’s too depressing to see the last credit deadline pushed back a month!
But be careful, we understand well: it is better to appeal to overdraft if, and only if, it is well authorized by the bank. This is a service that was previously requested from his banker, which is subject to a contract and conditions. If we do not have an authorized overdraft, we are talking about an unauthorized overdraft, and there, attention! It is better to use the postponement of monthly payments, as long as one can, rather than being at the mercy of the goodwill of his banker.
The banker may or may not make the payment of the credit. Everything will then depend on the client’s profile: a client who has solid and stable cash inflows, who has never had a particular problem and who has a good relationship with the counselor, is likely to not be bothered anymore. late, but will still have to pay a large fee. A difficult customer risks purely and simply the file at the Bank in France, and there, I guarantee that to be unpicked, it is not simple at all!
I repeat: the important thing, when we know that we can not assume the monthly credit, is to warn the banker. Together, a solution can be found, waiting for better days.
Must evaluate the credit risk, it is a better situation than the one who must now pay heavy chronic medical care.
Renegotiate its credit
In any case, there is one solution that is always possible: renegotiate its credit. By choosing a longer repayment period, we can reduce the monthly payments to repay, giving a little air to the borrower: it is the rescheduling of the loan. Many credits allow this, unless we have already chosen the maximum repayment period.
We can play on the repayment period, but also on interest rates: if the current rates are much lower than those at the beginning of the credit, it is possible to reduce its monthly payments without affecting the repayment period: the credit will cost less.
The repurchase of credit is part of the renegotiation elements of a credit in progress. If you can not renegotiate your current credit, do not hesitate to play the competition, many banks will be pleased to have a new customer, as long as it is creditworthy after the repurchase of credit. And if it is a monthly repayment of a credit that can not be refunded? Well, there is also the possibility to make a redemption repurchase credit.
Last element of renegotiation: the grouping of credits. If we have several credits, it may be wise to group all of them into one big credit, in order to lower their monthly payment, in exchange for a longer repayment period.
Be careful however to the renegotiation: there may be some fees, sometimes quite important. When it comes to renegotiating, you have to think about including the processing fees in your calculations, so you only have to pay back a little every month rather than having to pay the administration fees all at once.
Sample letter to request a payment deadline
This letter comes from the National Institute of Consumption.
As a precaution, the letter is sent to the creditor (bank, credit institution) by registered letter with acknowledgment of receipt.
As I indicated to you by telephone and in a previous letter, I am currently experiencing financial difficulties that make me temporarily unable to repay my monthly installments.
My request to postpone these deadlines having not received your agreement, I am forced to address the magistrate to ask for a suspension of payment on the basis of Article L314-20 of the Code of consumption.
However, before grasping it, I ask you to reconsider your position. To this end, I enclose a proposal for rescheduling encrypted and dated.
This letter is to be sent in case of refusal by the creditor to renegotiate the loan or to grant a payment period.
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