Proven ways to address the problem of payment of instalments

Unforeseen expenses, problems at work, health problems or inadequate management of your household budget can cause you to have difficulty paying your obligations. However, financial liquidity can be recovered. What should I do if I have problems paying on time?

If we have any problem with the payment of our obligations, we cannot, above all, sweep under the carpet, because it will not solve itself. The first thing I always advise is the contact with the client's guardian. You have to tell us what the problem is and see what the solutions are.

When you're having trouble meeting your commitments on time:

1. Look for a solution in the contract - some loans and credits have a "credit vacation", i.e. the possibility to suspend the payment of installments even for a few months. This extends the period of the loan repayment itself by another month, but gives the possibility of relieving the household budget when, for example, for 3 months we do not have to pay an instalment.
2. You can apply to the institution for solutions such as reducing instalments for a certain period of time or even changing the way you repay a loan or credit. The key is to justify the request - absolutely honestly and accurately we should describe our situation and prove to the institution that if it agrees to our solution and special conditions, it will actually be a win-win situation, i.e. both parties will be satisfied.
3. Think about consolidation if you have several different loans or credits. If you are unable to pay the installments because you have too many of them in relation to your earnings, it means that you are approaching being credited. You need to reduce the monthly burden to avoid more serious problems. Check the consolidation credit offers, ask for simulations and calculate which variant is best for you. Consolidation consists in lending to one institution an amount which will cover the repayment of all the loans and borrowings raised with other institutions. Thanks to this, we change several loans or credits into one, spread over a longer repayment period, but with a much lower installment. It is a relatively expensive solution, because long installments are also a long interest payment, but you can protect yourself from bankruptcy and problems with debt collection departments.

What can happen if you don't pay on time?

An example of a scenario of what happens when you do not pay on time is as follows. First of all, reminders will start with the institutions, as this is a breach of a contract signed with a timetable for repayments. Reminders can be e-mail, SMS or letter. Already then, we should contact the lender or lender.

There may then be reminders for which the institution may charge extra fees to increase your arrears.

If the institution has a recovery department, it will first use it. You may then be contacted by an employee of the lender or lender to discuss the repayment terms. This is usually the last moment when we can really talk about a new repayment schedule and compromise with the institution. Afterwards, our contract may be terminated completely. We then have to return the borrowed money and our debt can be sold to an external debt collection company that will enforce the repayment. In the worst case scenario, we may face court decisions, which will be the basis for the initiation of proceedings by a bailiff.

If we do not pay our installments regularly, we also damage our credit history. Our late or total failure to deposit is recorded and our credit score at the Credit Information Bureau is falling. When we go for a loan to another institution, even for instalments for television, for example, we can hear a refusal - precisely because of the bad repayment history of previous loans.

The creditor has also the right to report the debt to the economic information offices operating in Poland: Register of Debtors ERIF Biuro Informacji Gospodarczej S.A., Krajowy Rejestr Długów S.A., BIG Infomonitor S.A. and Biuro Informacji Kredytowej S.A. Then, information about the backlog will be available to various companies, including telecommunications companies, utility providers (electricity, gas), TV operators and other entities cooperating with theIGs. The entry will only be removed from the list of debtors of the Business Information Bureau once you have paid off your entire debt.

Loans work on a simple principle - an institution, lending money to a client, takes a risk. The fee for risk incurred is interest or commission paid by the customer. From a business point of view, your lender also doesn't want you to get in trouble and will certainly give you a helping hand when you negotiate new repayment terms. When you borrow money from family or friends, you don't want to lose their trust. When there are problems with payment, you immediately call your loved ones and ask for understanding. Do exactly the same for loans and credits from institutions.