Delays in repaying non-bank loans are frequent. Loan companies have their own ways to deal with the negligence of borrowers. Reminders, calls to settle arrears, prompts – these are just some of the less dangerous forms of loan repayment. In the event that the debtor does not try to contact the creditor and the debt continues to grow, the lender will probably resort to more radical methods. What consequences can we expect if the loan is not repaid?
Penal interest, i.e. the first way to mobilize the borrower
If we default on repayment, the first step taken by the loan company will be to count the extra interest , which together can give a substantial sum, and this will certainly not facilitate the repayment of the liability. Before signing the contract, we should carefully check the table of fees provided by the lender – thanks to her knowledge we will be aware of the financial consequences. It is worth mentioning that on the Internet you can find a public utility – interest calculator that will quickly calculate the amount of possible criminal interest.
However, it is always worth paying back loans on time , and this should be treated as a priority. Before making a final decision about an online loan, we should consider the repayment date. Deciding on a short loan period, knowing that we will not be able to meet the deadline, does not fit into the Code of Principles of the responsible borrower. The amount of the installment loan and the repayment date are two issues that should be matched not only to our needs, but above all the possibilities.
Calls for payment – what can you expect?
A popular form of reprimanding the debtor about his arrears in repayment of the loan is sending reminders, or calls for payment. Obviously, the debtor will be charged for the costs of reminders . The lender can remind us about the need to pay the debt with three ways:
- paper mail
The electronic prompt is the simplest, most popular and the cheapest form of the prompt. It is sent in the form of an e-mail or SMS, so it quickly reaches the debtor. The reminder method using a telephone prompt is used when the borrower does not respond to previous forms of warning. The phone prompt is more expensive than the electronic one, and charges are sometimes charged even if we do not answer the call. The last type of reminder – a written request, is sent in the form of a letter, most frequently referred to. Such a prompt is considered to be more significant than the others and at the same time may act as a pre-court payment request. All of the received prompts may be used later in the collection proceedings and presented to the court as evidence.
Monits can scare debtors and put pressure on them, accompanied by haste, which is not a good advisor. Many people take quick payouts by means of which they pay overdue installments. At first, this may seem like a good solution for getting out of debt, but with time we will see that it is a vicious circle, because there will be more and more pay-offs. In the financial sector, this phenomenon is called the spiral of debt , which is a serious threat for clients of financial institutions and often leads to the declaration of consumer bankruptcy. A much better way can be to extend the loan repayment date . It is worth asking for such a solution at the very beginning of problems with regular repayment of liabilities.
The debt collection process – what is it and how it goes?
The definition of the debt collection process is written in the legal letter: a set of legal, procedural and factual acts that lead to the debtor’s obligation to pay to the creditor. Those who had the dubious pleasure to participate in a given process know that it is associated with strong emotions and unpleasant experiences. Debt collection can be divided into three basic stages:
- Amicable debt collection – at this stage, negotiations and discussions with the debtor are held, which are carried out through various forms of prompts and personal visits of the debt collector – before the talks begin, it is worth knowing the rules of negotiating with the lender ; very often, the debt collection process is successfully completed at this stage;
- Debt collection – to solve the problem by court of income when the amicable agreement attempts did not bring results; thanks to the court’s judgment, the debt collector gains a writ of execution, which then becomes enforceable – it is the basis for initiating bailiff’s execution;
- Debt collector’s debt collection – at this stage, the bailiff proceeds to take action and undertakes activities such as: auction of movable property or real estate, searching for hidden debtor’s property, general supervision of execution.