If a borrower is having problems repaying their loan for any reason, the first thing they need to do is contact their lender. Sometimes things occur that are unplanned for and keeping the lines of communication open between the borrower and lender can smooth the bumps of a difficult time.
While a late payment can hurt the borrower’s credit, they should still alert their lender as to the reason why. Temporary set-backs happen to everyone. Most lenders are willing to accept a late payment and in order to give the borrower a hand; they may even waive any service charges or late fees.
If the setback is of a longer nature and the borrower and lender have remained in constant contact to work through the situation, the lender may be willing to work out a suitable arrangement for the borrower to pay back the loan. Keep in mind that in order to do this, there may be additional interest and fees attached to the original amount of the loan. The ability to pay it off a little at a time, though, will be better than the alternative of running up more fees than the borrower will be able to handle.
If the borrower should happen to default on the payment arrangements, the lender has the right to send the loan into collection status. If this happens, any collateral on the loan – house, boat, car – can be repossessed after proper legal steps have been taken. In some cases, like foreclosure proceedings on property, the borrower has the opportunity to sell the property before it forecloses or even have the chance to raise the money to completely pay off the debt.
No matter what happens to cause a borrower to default on a loan, they should always contact their lender.
If you are in financial trouble and can’t pay your bills you should seek independent financial advice. The UK has several agencies that can help you for free, giving honest unbiased advice.
Here are some of them:
National Debtline
National Debtline offers free, confidential and independent help and advice over the phone for people in England, Scotland and Wales.
View website →
Consumer Credit Counselling Service (CCCS)
The CCCS provide a free helpline offering free, independent and impartial advice to people that live in the UK who have debt problems You can call them on 0800 138 1111 .
View website →
Community Legal Advice (CLA)
If you qualify for legal aid and live in England or Wales, CLA can provide free help or legal advice over the phone for problems with debt, housing, employment, education and welfare benefits and tax credits.
View website →
Payplan
Payplan provides free advice to people living in the UK on debt and budgeting, including free debt management plans and IVAs (Individual Voluntary Arrangements) without upfront fees.
View website →