It can not be hidden that there is a big problem with timely repayment of debts – from year to year the average debt per person in the country increases, and the total amount of debt of all people increases. It is not without reason that the term “what is the risk of loan default 2019” is searched so often.
In the vast majority of cases it is not that the debtor has money, but he prefers to spend it on something else or knowingly does not want to pay off debts and does not plan to do so. Usually, simply sudden expenses, rising living costs or other problems make us simply unable to pay our debts on time. Then the question is asked: “I am not paying back the loan, what threatens me?” We are aware that there will probably be some consequences for us, but we do not have accurate knowledge about it. It is worth getting it, because thanks to that we may avoid the darkest scenario. In that case, what is the risk of defaulting on loans? Is there a prison sentence for debt?
First effects of loan defaults
What is the risk of loan defaults? At the very beginning of our problems with late payments, everything will happen slowly and calmly. The bank may send us letters, SMS messages or will start contacting us by phone or e-mail. Very many debtors at this time decide to ignore these contact attempts: they reject calls, throw away letters, delete emails. In this way, we will only postpone the negative consequences of our actions, but they will undoubtedly reach us at some point. The culmination of all these contact attempts will be the bank’s final request for payment.
Failure to perform the required payment within a specified period will in this case result in the termination of the loan agreement, which in turn will result in the necessity to repay the entire debt, not just missed installments. What awaits us next? Probably contact from the debt collection company entrusted with the recovery of the debt. The good news is that at this stage we can still try to normalize our financial situation and get out of the whole situation unscathed. It will be much more difficult later.
How to deal with debt collection?
Debt collection companies have a very poor reputation among all people. They are widely considered unfair and harassing. Debtors indicate a huge number of unannounced visits, phone calls and text messages as proof that they are almost persecuted by these organizations. However, just like in any field, among debt collection companies you can find ethically and not. We can’t predict which one we will hit. In both cases, however, we can try to negotiate with the debt collector. Escaping from responsibility will do nothing, and in the long run will only make things worse. Contrary to appearances that can be created by a debt collector, in fact involving a bailiff is not a good solution for him.
The best way out for both parties is to reach an agreement and work out a debt repayment schedule that will be compliant for the debtor. First, the bailiff will cover his own remuneration from the proceeds from bailiff enforcement, only the rest will be used to pay the debt. In the case of an insolvent debtor, it may quickly turn out that thanks to the bailiff, not only the debt was not recovered. In addition, the debtor has lost its ability to stabilize his financial situation for good, which means he will not be able to repay the debt.
What threatens loan defaults?
Answer the question “What is the risk of defaulting on loans?” you can very briefly: financial ruin. Escaping from creditors is understandable, because contact from them is always associated with great stress. However, in this way we will not improve our situation, on the contrary. Increasing interest, debt collection, bailiff and in some cases even prison – non-payment of debts has serious consequences, therefore all liabilities must be incurred responsibly. Very many people take loans and do not suffer any negative effects because of it. It is important to know your financial capabilities and not to exceed them.