Sometimes, due to various random events, loan installments become too high to be able to repay them regularly. A person who finds himself in this situation should not wait for the problems to resolve themselves. It is important to take appropriate measures as soon as possible that will lead to debt restructuring
It depends mainly on the position of the person who is unable to repay the loan. For example, when the debt is not large and is associated with a credit card, this solution may be offered by the bank that issued it. There is a possibility of paying off such debt in installments.
This is a very reasonable idea because it motivates you to regularly reduce your debt. In addition, an installment loan is cheaper than a car loan by a few or several percentage points.
However, if the bank does not agree to repay the debt in installments, you can take out a simple loan to settle the debt on the card. However, this solution only makes sense if the card owner does not increase the debt associated with it.
If someone has many debts and the amount to be repaid is high
Debt consolidation may be the solution. It is nothing but the repayment of all loans with one larger loan. If such a consolidation loan can be additionally secured by e.g. a mortgage on real estate, its installment should be lower than the sum of installments of all loans.
Debt consolidation is not an option for everyone. Banks are unlikely to give credit to someone who has a lot of debt. In addition, not everyone has assets that could be collateral for the consolidation loan. You should also remember the costs related to debt consolidation, i.e. commissions and fees for the new loan.
If consolidation is not possible for some reason
The debtor should first of all agree with the bank and reach a consensus. However, one should take into account that the bank will not be willing to make any concessions. It may be a good move to inform your institution about temporary financial problems before even requests for payment are sent.
The bank may then be more willing to negotiate and will propose a mutually beneficial solution. Such solutions may be, for example, extending the debt repayment period, periodically suspending the repayment of the loan principal or suspending the repayment of the entire installment.
The situation of people struggling with temporary financial problems, and thus the inability to pay their debts on time, is not easy. Such people should remember, however, that there is always a way out of every situation. The most important thing is to be aware of the seriousness of the problem and do everything possible to prevent existing debts from increasing.