Loan repayment is an inseparable and least pleasant element of the money borrowing process. Even if we decided to go into debt with a bank and not with a loan company, the formalities imposed on us by the institutions seem nothing compared to the hardship with which we then have to pay further installments. In theory, none of us should have a problem with this, because before anyone grants us a loan, he checks our creditworthiness and credibility as customers, calculating what we have the chance to regularly and timely fulfill the terms of the contract. However, practice shows that even banks sometimes make mistakes in calculations and paying off debts does not always look the way it should. Let’s find out how to pay back loans quickly and avoid financial penalties.
How to pay back loans? – choose the right type of loan
It all depends on how much money we have borrowed and the repayment period we have. The proverbial knife on the throat can be felt by customers of parabanks who have drawn payday loans, i.e. commitments for 30 days. The exceptions are offers in which the repayment period is extended to 45 or even 60 days. Despite this, it is still not much, which is why long-term offers are very popular, because they allow the borrowed amount to be paid back in 48 installments.
This has its advantages. Thanks to this option, we relieve the household budget and get rid of debt in small steps, but not without consequences – with higher loan amounts, the commission is so high that in the end we refund the company almost twice the amount borrowed. It dramatically changes our situation – it turns out that instead of a loan for current expenses, we have taken on our shoulders a commitment on a much larger scale. Half poverty if we can meet it. If not – we will be charged with extra prompts, and if that doesn’t work – debt collection and court bailiffs. The question of how to pay back a loan should therefore be preceded by the type of loan we should decide on.
How to pay off debts? Final method: consumer bankruptcy
Insolvency applies to persons who, at the time of declaration of bankruptcy, do not conduct any business or professional activity. Also if such persons are unable to meet their financial obligations and their delays in paying off debts are longer than 3 months .
There is one way to avoid such “pleasures”. This is not the most popular method of paying off debts and probably will not come to our mind first, but it will work just as well as the others, if something happened in our life that prevents us from fulfilling our obligations. We are talking about the declaration of consumer bankruptcy, which in most cases allows borrowers to get out of the spiral of debt and gives a chance for a new start. Choosing such a solution requires more insight into the subject, because treating it as a remedy for every financial crisis will not necessarily lead us to a happy ending.
In this case, any errors will result in unpleasant legal consequences. The idea of consumer bankruptcy, as in the case of entrepreneurs, is customer debt. However, for the court to declare such bankruptcy certain conditions must be met. Until 2018, it was required to document that our insolvency does not depend on us – e.g. despite previous impeccable opinion at the bank, it turned out that we had barely started paying off the liability, we had an accident at work or we had a serious illness. If we were unable to do so and there were indications that the problem of repayment was due to our negligence or when the court stated that we had incurred it knowing that we would not be able to pay it anyway, we could have expected the application to be rejected.
Consumer bankruptcy according to the amendment and what next?
At the moment, the act has been amended, and debtors who have made every effort to find themselves in this situation have a chance to accept the application for consumer bankruptcy. What solutions can we use? First of all, they can count on a new debt repayment schedule, i.e. paying back the debt in installments adapted to the current financial situation. However, the number of installments cannot exceed 7 years. The second solution is conditional debt cancellation for the time needed to normalize the debtor’s financial standing. In such a situation, we will have to provide documents from time to time that will allow us to assess our ability to pay. When the court decides that we are able to cope with the commitment, we proceed to repayment in installments. The final solution is the conclusion of an agreement with the creditor, i.e. planning the appropriate repayment of the obligation without the need to declare consumer bankruptcy.
How to repay loans quickly?
We emphasize the accelerated option of repayment for a reason. It is beneficial not only because we get rid of debt faster and increase our creditworthiness again, becoming attractive customers for banks and loan companies again. Such a step often means for us real profit from overpayment of the loan.
To make it a fact and time become our ally, we have several options on how to pay back loans. Obviously, there is money raising to pay the debt. Changing work for a better-paid job is not always feasible, so let’s start, for example, by finding an additional job, such as completing online surveys. It is possible that we also have goods that are easy to cash – car, jewelry and home electronics and appliances that we do not use. By selling them, we will reduce our debt level or even get rid of it completely.
How to pay off several loans?
If we have taken loans from several banks and we have a problem with repayment, it is worth thinking about a consolidation loan. Ultimately, this will unfortunately increase the amount of our obligations, but reduce the amount of monthly payments, which will make it easier to pay off the debt. This is a convenient solution, because all payments we have accumulated in one institution. Thanks to this, one payment date is also set for us, so the risk that we will forget about one invoice decreases. At the same time, we should consider whether our budget will endure an increase in commitment time. This, in short, is a consolidation loan. We can combine almost all bank loans: cash, revolving, car and even housing, but by increasing the loan period, the amount of costs (commissions, interest, etc.) increases. We have to decide ourselves what is the lesser evil for us: paying off several higher installments and meeting the contractual terms on time, or combining them into one, with the option of late payment completion.
Consolidation of payday loans – is it possible?
It is worth noting that consolidation is also possible in the case of non-bank liabilities and may also help us pay back loans taken out by loan companies. However, in this situation we will not get a loan from the bank. Where to go for help? There are companies that offer their clients the opportunity to consolidate their debt and adapt the new installment amount to our needs. However, if such assistance does not suit us, it is worth finding a lender who offers long-term loans and accepts our application. In such situations, it will be important to find a commitment that will cover our current debt, and the number of installments and their amount will allow you to easily match the commitment to our home budget. In this way, we turn several short-term products into one tailored to our situation.
Debt repayment – why is it so important?
Why is it worth paying back loans? A trivial question, but, as it turns out, many Poles are unaware of the consequences of not paying their debts. The current record level of debt will certainly be beaten in the next. Experts signal a growing number of debts among young people and seniors – without creditworthiness and any financial awareness taking payday loans in parabanks.
Failure to comply with the terms of the contract is each time recorded in the Credit Information Bureau. This can be important in the process of applying for another loan. In turn, those clients who have ceased to pay loan installments will be entered on the list of debtors (BIG, ERIF, KRD). Unfortunately, this closes their way to use banking products. Only borrowers’ offers are left to such borrowers who will claim their money much faster than any bank.