Taking a cash loan from a bank is an obligation imposing specific obligations on the consumer. In addition to reasonable disposal of the money awarded, it is worth remembering to comply with the terms of the contract. Cash loan defaults – what are the consequences of this risky practice in the short and long term?
Cash loans are financial liabilities that are very popular. Consumers haul them for various purposes, looking for a source of financing for important expenses. For some, they are urgent and require immediate implementation, while others can achieve their goals, dreams, etc. with a loan.
Taking a loan, contrary to appearances, is not easy. The bank thoroughly verifies the customer’s personal data, history of repayment of existing liabilities, financial situation, professional status, earnings, creditworthiness and the purpose for which the loan is to be granted.
Loans are liabilities widely advertised on the radio, internet and television. Although advertisements may give the impression that obtaining this commitment involves small formalities and it is trouble-free in future repayment, the lives of many customers quickly verify this against reality. Under the influence of many factors, there are problems with repayment.
Non-payment of a cash loan, regardless of whether it is due to negligence, deliberate omission, a difficult life situation or financial problems, is a serious problem. There are many consequences associated with this, whose short- and long-term effects cannot be ignored. It is worth being aware of the tools that the bank, debt collection agencies and state bodies have the right to be prepared not only for the consequences, but also to know your rights.
Cash defaults – the bank therefore has a specific action plan
When obtaining a cash loan, the main document is the contract. It confirms and certifies on paper such aspects as who is the party to the transaction, what obligations it has towards itself, under what conditions and in what amount the loan was granted and what happens in the event of repayment problems. Regardless of the bank’s intentions, it is required to provide written information on possible procedures and consequences for late payers.
Hardly any consumer probably assumes a scenario which will be in the case of problems with timely repayment. No wonder, because the majority of borrowers, who will have problems with their repayment in the future – suddenly and unexpectedly encounter them. Sickness, job loss, unexpected change in family situation and other financial problems cause that many consumers regularly find it difficult to pay their debts.
Similarly to eg loan companies and any other service companies, also banks have a clearly defined action plan for such cases. The goal, as you can hardly guess, is clear. In theory, this is about taking effective and lawful steps to recover outstanding financial receivables. Depending on the stage of debt, the bank reaches for various levels of the tool. What are the specific steps?
Cash loan defaults – consequences
We mentioned above that the consequences of not repaying are not unique to banks. They usually have a similar pattern as in the case of late payment for other services.
- From the first day of arrears, penalty interest is charged for each day of delay.
- In the first place, the bank usually attempts to contact the customer to remind about the outstanding balance. Sometimes the reason for the delay is asked, giving information about the consequences of non-repayment, the state of interest, etc. If the amount of debt is small and occurred in a relatively short time, amicable cooperation to settle the debt may be offered.
- However, if the state of consumer debt is deepened and this, for example, does not cooperate, then the following scenarios may be fulfilled:
-Bank terminates the loan agreement and charges the consumer with the obligation to repay the entire liability immediately.
– The debt recovery case will be sold to an external debt collection company.
-Bank can start applying for an enforcement order in court. If the court agrees, the debtor may be subject to bailiff enforcement.
- In addition to the potential loss of valuable property, the last point will also be the bank’s entering customer data in one of the debtors’ registers. Most often they are such databases as BIK (Credit Information Bureau) or the ZBP (Polish Bank Association). In addition, the registers of Economic Information Bureaus (BIG), ieBIG InfoMonitor, the National Debt Register (KRD), the National Economic Information Register (KBIG) and ERIF. The consequences of such information appearing in these registers are embarrassing. In the future, the consumer may have a problem not only with obtaining credit, but also loans. In addition, he may not receive the goods in installments, he will not be able to take leases, concludes the subscription contract and many others.
What does debt collector’s enforcement look like?
Debt collection companies are private entities independent of financial institutions that deal with the purchase of debts and assume responsibility for their enforcement. The scheme of their operation usually consists of attempts to contact the debtor and provide him with information on how to solve the difficult situation. In theory, debt collectors are required to maintain full discretion, not to use verbal aggression, they cannot intimidate, to provide exaggerated and false information about the consequences and to occur, eg in the workplace.
Their task is to provide, by lawful means of persuasion, information on, for example, spreading the debt in installments. Unfortunately, frequent violations of law by debt collectors effectively contribute to building a negative image of this professional group.
What does debt collection by a bailiff look like?
The bailiff is usually the last resort and tool that is taken into account when all other methods of attempting to collect debt have proved to be ineffective. The bailiff, in the event of obtaining the court’s consent (writ of execution) has the right to act within the limits of his powers. It can implement them using much more radical and uncompromising steps, making it difficult for the debtor to avoid them.
The bailiff has the right to take over the following debtor’s assets against debt repayment.
- Bicycle, skis, motorcycle, car and other vehicles.
- Electronic property – computers, tablets, laptops, smartwatches, smartphones, TVs etc.
- Household appliances – mixer, coffee maker, toaster etc.
- Jewelry – earrings, bracelets, rings.
- Real estate – an apartment, a house
- Account funds.
Confiscated property usually goes to a bailiff auction and is sold. With the bailiff it is worth looking for fields for settlement, declaring your willingness to pay the debt. Otherwise, you can lose a lot due to your outstanding loan.