What if you can’t Pay a Personal Loan?

When contracting a personal loan, as a general rule, you are sure that you will be able to face the debt month by month. But on some occasions, there are unexpected situations such as a dismissal or perhaps the illness of a family member, which make it impossible to meet the budgets that were planned.

When this happens, it is not necessary for him to live startled, avoiding picking up the phone for fear of recoveries or ‘like the ostrich’, with his head buried to try to escape from problems.

What does it Mean to be a Loan Holder?

There are solutions in the event that you cannot pay a debt or facing issues for “연체자대출” but it is important to know, before hiring a personal loan, what it means to be the owner of one.

To begin we must know that the loans have personal guarantee, that is, when contracting a loan we offer as collateral all your present and future assets. That is why, in the event of a prolonged non-payment, a judge, at the request of the financial or credit institution, can give a sentence that our assets are seized.

The most common are usually the bank account and the part of the payroll or pension corresponding to the minimum interprofessional salary, but if the amount of the debts is high, they can also seize the car, the house and all those goods that they believe are necessary to settle Debt.

In addition, if someone has guaranteed the loan, the person who has done so will also have to take over the debt, since the guarantor jointly agrees to take over the repayment of the loan, so if we can no longer pay the installments and we do not have sizable assets or these are insufficient, the guarantor has the obligation to pay the debt and if necessary it can also rule that their assets be seized.

You are Already Delinquent

On the other hand, at the moment that a debt is stopped paying, it is registered in a file of defaulters, very consulted by financial and credit entities when granting a loan, which will practically make it impossible to access financing in the future. To stop appearing in the delinquent file, it will be necessary to first cancel the debt and ask the entity to make us a certificate that we have paid, to later send it to the delinquent file in which we were registered so that they can delete us.

Another important fact to know is that from the first installment that is stopped paying, the entity will charge default interest, normally much higher than ordinary interest, as well as it can charge a commission for claiming payments or unpaid installments. Both interests accrue to the original debt, which will cause more money to be paid in the long term.

These are Priority Expenses

Thus, we see how the non-payment of a loan can cause us serious problems, so it is important that in planning monthly expenses, the payment of debts are prioritized over other expenses. Faced with an economic problem, we must never think of the non-payment of a debt as a solution, since in the future it will bring us not only greater economic problems but strong headaches.

And if for any reason we cannot pay the loan installments, before the installment expires, the most advisable thing is that, without fear or shame (most people, at some point in life, go through difficult economic situations), let us go to our entity to explain our case to them.

Generally they will try to offer us a solution, such as establishing a longer repayment period so that the monthly payments are lower, refinancing the debt or a period of absence of capital, during which we only pay the interest. While these options will make your debt higher over the years, they are practically the only short-term solutions. Always keep in mind that financial institutions prefer to collect debts late than to enter a judicial process.

Can be Declared Insolvent

The only other possible alternative to face the non-payment of a debt is to declare insolvent. Thing that from the modification of the Bankruptcy Law, natural persons can do, in a process very similar to that of legal persons. A bankruptcy must be held, through which the lawsuits filed for non-payment are paralyzed and the possibility of seizure is frozen until the process is completed.