How to reduce or write off loan debts: 5 working ways

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

You took out a loan. But now you cannot pay. You have multiple outputs.

To begin with, there is no magic wand. Take out a loan, then not pay and happily forget about everything. The question is what are you willing to give: time, nerves, credit history, property or even more money and even work.

Let's see what options are there, besides the debt hole.

1. Debt restructuring

Restructuring is a change in the conditions under which you pay off a loan. Most often, borrowers ask to reduce the mandatory payment, which must be paid to the bank every month. Then it turns out that the burden on the personal budget is easier, which means that you can continue to pay off the loan, without delay.

But the bank does not go to such concessions for nothing, it puts forward counter conditions. For example, it extends the term of payments. That is, you have to pay less every month, but these months will be much more. And since interest is charged for the entire period of use of the loan, the total amount that will have to be paid to the bank grows.

When will it work

When you are a good payer, but you have temporary difficulties. You will overcome them soon and you can prove it: bring certificates to the bank, show a good credit history.

What do I need to do

1. Contact the bank before you miss a required payment. This will show that you know how to assess the financial situation and are not trying to hide from the bank.
2. Collect the necessary documents and submit them to the bank. Which ones, it is decided in each case in different ways, this needs to be discussed with the manager.

Than it is bad

The main disadvantage of this approach is that the debt itself does not decrease. Rather, it is growing. But you have the opportunity to pay it off, and not fall into debt.

In addition, the bank may not meet you halfway. Then you will have to look for other options for repaying the loan.

2. Debt refinancing

The word "refinancing" is similar to "restructuring", but the meaning is completely different. Restructuring is when you agree with the bank that you repay the loan in a new way.

Refinancing is when you take out a new loan to pay off an old one (or several old ones). It is assumed that the new loan will be on more favorable terms.

When will it work

When you have a lot of small loans in different organizations and you are already tired of checking what and to whom you owe. It is easier to take one loan and deal only with its repayment. At the same time, you have a good credit history.

What do I need to do

Show initiative. Consider all the proposals for refinancing loans that are available on the market, and calculate whether such a procedure will help you: will you really pay less or the rates for refinancing programs are so high that it is better not to get involved with them.

Than it is bad

1. Not all banks refinance their own loans. You need to look for offers in other banks, and this is quite difficult.
2. Finding a truly profitable offer is a big and difficult quest.
3. Banks often view refinancing as an increase in financial burden rather than relief. Refinancing fits into the credit history not as refinancing itself, but as another loan. Therefore, if it suddenly becomes easier for you to pay debts and you decide to borrow money again, then you may be refused, because you have “too many loans”.
4. Banks are often denied. Anastasia Loktionova, deputy general director of the Rusmikrofinance group of companies, explains it this way: “Usually an unspoken rule comes into play: no more than 50% of the borrower's total income should be allocated to finance the debt obligation. In this case, an important role is played not only by refinancing, which the client wants to receive, but also by other obligations that he managed to issue. If the total payments on all loans (mortgages, consumer loans, car loans) are more than half of the borrower's income, this may act as the most compelling reason for the bank to refuse."

3. Writing off the debt by the statute of limitations

There is one loophole in the law that allows you to take money, but not give it back and write off debt on loans. This is possible if the organization to which you owe has filed a lawsuit too late and the debt can be written off due to the statute of limitations.

The general limitation period for debt collection is three years. If you borrowed money, and you were sued after 5-6 years, then you can safely petition the plaintiff to be denied the claim for debt collection, as he missed the statute of limitations.

Vadim Kudryavtsev lawyer

When will it work

When a bank or microfinance organization fails to file a lawsuit on time. For example, you transferred a debt to collectors, and you successfully hid from them.

What do I need to do

For a very long time, namely three years, do not pay anything (and do not communicate with the bank at all) and wait until you are sued.

Representatives of a financial institution start working with problem borrowers 30 days after the delay. If 90 days after that the debtor has not paid, then most often the financial institution sues. The statute of limitations is counted from the date of the last actions on the loan. If the borrower enters into negotiations with a financial institution, signs documents, makes any money, then the limitation period is renewed again.

Anastasia Loktionova

Than it is bad

1. It is necessary that the "stars converge": the bank also knows about the statute of limitations and usually file a lawsuit in advance.
2. Collectors are likely to be involved in debt collection. The stories about the work of such services are notorious.
3. It is unlikely that after the story with the court and the cancellation of debts, you will be able to count on a new loan if you suddenly need it: the story will be hopelessly ruined.

4. Bankruptcy

Bankruptcy is a special legal procedure. You officially - that is, through the court - declare that you have no money and will not have, you will not repay the loan. After the court declares you bankrupt, your property will be sold to partially cover the debt. Even if it is not possible to pay off the debt in this way, there are no more claims against you - you are bankrupt.

When will it work

When things are really bad. Really bad. The debt must be more than 500 thousand rubles, the delay in payments is more than 90 days.

What do I need to do

1. Collect the necessary documents.
2. Submit a bankruptcy petition to the arbitration court.
3. Complete the entire procedure.

The set of documents for filing a bankruptcy petition by a borrower is huge. It is established by the law "On insolvency (bankruptcy)", part 3 of article 213.4. The legislator, apparently, did not set himself the task of making the procedure as simple as possible for citizens. Moreover, the list of documents is individual in each case. The approximate list includes more than 20 positions, so this is really not easy.

Oleg Iskakov, attorney

Than it is bad

1. The procedure itself costs money, and they still need to be found: you need to pay the state fee and the work of a financial manager, and then go through the entire trial. Not the fact that the court declares bankruptcy.
2. The property will be sold, leaving only the necessary: the only housing and personal belongings. Therefore, bankruptcy is suitable for those who have already had nothing or have already sold everything.
3. After bankruptcy, much is impossible. For example, you cannot start a new business or hold leadership positions for several years. The list of restrictions depends on the decision of the court. They can prohibit, for example, traveling abroad. In addition, it is unlikely that even a few years after bankruptcy one can expect that someone will give a loan or call to run the financial department.

5. State program for writing off debts

The state program is designed for people who have bought economy-class housing and now cannot pay their mortgage. The program allows you to write off 600 thousand rubles from the mortgage loan debt.

When will it work

When you have a mortgage, you are eligible for participation in the program, your income has dropped, and your loan payment has increased.

What do I need to do

1. Go to the website of the state program.
2. Check if you are eligible for the program.
3. Collect the necessary documents and submit them to the bank.
4. Wait for the decision.

Than it is bad

1. The program is not suitable for everyone, it has many limitations.
2. It only works for mortgages.
3. You need to collect a huge amount of paper to use it.
4. The program does not exempt from the entire loan and related payments: you need to make monthly installments, pay for insurance, and so on.

There are many drawbacks to any of these methods, and, of course, it is better to live without debt, although this is not always possible. Do you have a lot of loans?