Not keeping up with payments can have far-reaching effects on your credit score and finances. Make sure you nip it into the bud before it is too late.
Are you struggling with payments on a personal loan? It is no wonder that larger monthly instalments take most of the borrowers by surprise. Although there is no risk of losing an asset to your lender, they have the right to keep chasing you for payments. If nothing turns you to payments, they can send your account to collection agencies, which might take you to court, and then you will have to follow the court’s order.
The consequences will be worse beyond your imagination if the matter is taken to court. Once a CCJ has appeared on your credit report – whether satisfied or not – all your chances of qualifying for a loan will have gone outside the window.
Help is always there. You can knock on the door of the Financial Services Ombudsman if you find that a lender has lent you more than your affordability; however, the grievances are resolved only when the lender is found guilty.
But in some cases, it is hard to pass the buck. The unexpected turn of financial events can be a responsible factor in making payments all the harder. What if you have taken out a personal loan and cannot keep up with payments due to financial problems? Here are some vital tips:
Do not raise false hopes that thingswillsoon be better or you will manage. Before missing a due date, you should immediately contact your lender and frankly tell them about your financial situation. They will lend an ear to your problems and propose a new repayment plan. The following ways they can help you:
Lenders will not reschedule the payment term. Remember that whichever method you choose; interest will keep accruing over the unpaid balance. Make sure you contact your lender a couple of days before the due date so they can look over your situation and decide what can be done to help bail you out.
Check your budgeting app if you are using any or otherwise a bank statement to see where you can whittle down. At this time, you should switch to a bare-bone budget, which allows spending only on essential expenses. On no account should you spend a penny on discretionary expenses.
If you come up with something like that, put it off and try to make do with things you already have. At this moment, debt settlement should be your priority.
The budgeting app will show all your monthly expenses in one place. Create a manual spreadsheet if you are not using an app. Add up and find out how much money is going out. It must be less than your total earnings. It is a red flag if the reality is the opposite.
Even if your outgoings are less than incomings, you need to figure out how you can further cut back on your expenses. Here are a few tactics to help you get back in the saddle:
You will be paying through your nose if you make a default on a personal loan in Ireland. Therefore, it is paramount to adjust your budget to your current financial situation.
Consult a financial advisor to know your options. When you have many debts to pay off, you can combine them together and turn them into one loan. It will be much easier to manage payments of a single loan rather than multiple debts due on different dates. However, this option is only possible when your credit rating is good.
Debt management companies can also help you get out of this situation. They will negotiate with your lenders to accept less than the due amount. Remember that you will have to pay fees if you choose a debt management plan.
Downsizing should be a last resort. If you owe a lot of money and it is difficult to make payments, you should think about downsizing. You should switch to a smaller house. The equity you release from the sale of your current house should be used for the settlement of your outstanding debts.
Downsizing is only an option when you have a large space, and you can live in a smaller house.
There will be hell to pay if you fall behind on payments on a personal loan. Not only will you be paying through your nose, but you will also lose your credit points, which will remove your scope of borrowing money at lower interest rates in the future.
You should talk to your lender to know if they can help you in any way. It is vital to contact them for help before making a default. Debt management companies can also help you to get you out of debt.
In addition, you should focus on your budget too. Trim down your expenses and ensure that you manage to make more than the minimum payment. Until you completely settle your debt, make sure you do not spend on discretionary expenses.
