Carefulness of loan funds and thorough verification of clients’ solvency before the conclusion of the contract do not exclude the situation when the borrower fails to repay the loan. There may be many reasons for this (e.g. worsening of financial situation due to losing a job or a lucrative customer), however, failure to comply with the loan terms is always associated with negative consequences – which ones? It depends on the provisions of the specific contract. Below are the four most common effects of loan defaults.
Consequences of non-repayment loans – additional fees
The basic consequence of a loan being unpaid is that the loan fund charges additional fees – initially for each prompt sent (regardless of its form). Information about this type of costs can be found in the table of fees and commissions charged by the company – it is worth to read it before signing the contract.
In a situation where the requests for payment have no effect in the form of repayment of the debt, the loan company may initiate debt recovery actions or bring the case to court and thus involve the bailiff (after 30 days late in repayment of the contracted obligation). The borrower is then charged with all costs associated with such activities. Lack of loan repayment may also result (and usually results) in additional interest being charged for each day of delay in paying the debt.
Loan funds in the event of deterioration of the financial situation of the borrower may propose renegotiation of the contract. Supra Cass Company customers can count on flexible restructuring of the loan they take and if the situation bodes well, they have a chance, for example, to extend the loan agreement or even lower installments.
Consequences of non-repayment of a loan – entry in the register of debtors
Another consequence of the loan being unpaid may be an entry in the registers of business information bureaus, such as the National Debt Register, EERIF Debtor Register or GIV InfoMonitor. The right to make such an entry arises when the debt exceeds PLN 200 and is late by more than 60 days. Such entry is processed by registers for 5 years and if the liability is not repaid, it cannot be deleted in any way. The history of debtor lists is checked when incurring various types of liabilities in banks, loan funds, etc., and finding a record about the debtor undermines its credibility and solvency, as well as the chances of receiving the needed money in the future.
The effects of loan default – deterioration of creditworthiness
Lack of loan repayment and other irregularities related to its regulation are associated with deterioration or even loss of creditworthiness of an unreliable borrower. Non-payment of obligations and subsequent entry on the publicly available list of debtors may result not only in the refusal to conclude a contract by financial institutions, but also potential business partners.
The effects of loan defaults – bailiff enforcement
If the matter of non-repayment of the loan goes to court, the bailiff intervenes. He has the right to collect the overdue amounts directly from salary and other benefits – such as retirement or disability pensions. He may also enforce the debt by taking over the debtor’s property with a total value covering the amount of the outstanding loan, including any additional fees.