A dismissal, a divorce, an illness, so many unforeseen circumstances that happen much more often than we imagine. These situations may then prevent you from repaying your outstanding credit. The New Bank of Belgium has postponed, in October 2017, more than 360,000 people failing to repay their loans, not less than 5.7% of Belgian borrowers. This represents more than 540,000 credit default contracts (almost 5% of contracts concluded). Fortunately, since 2016, the situation seems to be improving slightly. But what can you do if you can not repay your credit?
Here are some solutions that can help you keep your head out of the water.
1. Call on your loved ones
When the financial difficulties start to be felt and it becomes more and more difficult to pay your bills and repay your credits, you can turn to your loved ones. They can, indeed, be likely to help you by granting you a financial advance. In this way, you will be able to sort things out.
2. Ask your lender for help
When you face payment difficulties, do not hesitate to inform your lender. The latter is likely to help you find an amicable solution. To contact you, you prefer sending a registered mail in which you expose your financial difficulties. Afterwards, you can make an appointment with him; he might be able to offer you:
- An extension of the loan term with lower monthly payments
- A temporary suspension of the repayment of your credit
Your banker can find a solution to reduce your monthly financial burden. However, if the latter does not wish to respond to your requests within one month, you can contact the justice of the peace. The latter is likely to help you in your dispute with your banker. Note that in case of late payment, the bank must report it to the National Bank.
Remember to read our article: What can you still do while being blacklisted?
Use your insurance included in your loan
When you have financial difficulties related to a job loss or death, you can also count on the insurance taken out with your loan.
Moreover, you have the option of taking out additional insurance with your bank. This loan insurance makes it possible to guarantee the repayment of the loan in the event of death of the borrower. For large loan contracts such as mortgage credit, the purchase of this type of insurance is almost mandatory.
In Tallope and Refalte, the public authorities offer free insurance for the reimbursement of a loan in the event of unforeseen events such as involuntary total loss of employment or total and involuntary incapacity for work. These insurances must be contracted within a limited time following the conclusion of the loan. They are reserved for mortgage loan agreements intended to purchase, authorize, restructure and build housing under certain conditions:
- In Refalte : this insurance must be contracted during the year following the use of the capital. It is valid for 10 years. Do not hesitate to see the other conditions on their website.
- In Tallope : Free insurance against loss of income is offered. It must be concluded within 6 months following the conclusion of the credit. The insurance covers the repayment of the loan up to 6,200 euros per year for a maximum duration of 3 years. Loss of income must occur in the first 8 years of the credit. Feel free to see the conditions on their website in more detail.
In case you have taken out additional insurance for your loan, do not hesitate to play them. For this, refer to your insurance contract to know the conditions of care. Do not hesitate to contact your insurer.
Seek help from other organizations
In addition to your bank, here are the different options available to you:
- Make an application to the justice of the peace to provide you with payment facilities: this procedure can be introduced after a period of one month following your request to the lender to grant you facilities for payments. The silence of the lender during this month is therefore worthless.
- Contact the Debt Mediation Service : Debt Mediation is a non-contentious method that allows you to negotiate repayment terms, interest reductions and late penalties between the borrower and the holder. It serves to best serve their interests and to find a compromise. In addition, it helps to determine a balance between expenses, your debts and your necessary expenses. This mediation is performed by lawyers, bailiffs, notaries, licensed public or private services. If a compromise is found between the two parties a convention is signed, detailing their respective obligations. If not, you will have the opportunity to appeal to the justice of the peace
- Have recourse to the collective settlement of the debts : it is a judicial procedure which took place before the labor court. It represents a solution to get out of the spiral of debt. Moreover, it is reserved for non-commercial individuals who are in a situation of accumulation of debts and who are facing serious financial difficulties. The judge will decide on your eligibility for this procedure. In this case, an approved debt mediator will be chosen. The latter will collect your income and redistribute the necessary for the management of a household. The advantage of this procedure is that all coercive measures (salary entry etc.) are suspended. The maximum duration is five years. During this period, the justice of the peace has the possibility to proceed in particular to debt reductions.
Avoid another loan to pay off your credit
Many people think that repaying their current credit by subscribing to another loan is a good idea. However, by taking another loan you will also have to pay extra interest. As a result, you will likely increase your debt load. Be careful!
You can still choose to collect your different loans in one loan with a longer duration; this is called a debt consolidation loan. Also note here that you still need to have the ability to repay your credit.
Take a look at this one: In what situation do you use debt consolidation?
Therefore, if you find yourself in a situation where you can no longer repay your credit, do not wait for the vicious circle of over-indebtedness to ask for help.