A person who can no longer repay their loan must act quickly to prevent the situation from worsening. They must take certain steps to clean up their financial situation in order to settle their debts.
If the problem becomes inextricable, it is important to seek an amicable solution with all concerned parties to facilitate the resolution of the crisis.
The right reactions to have from the beginning
As soon as you experience difficulties repaying your loan installments, you should discuss it with your bank or the lending institution. Specifically, you need to explain your situation by sending a registered letter and request a reduction or deferral of repayments.
Banks have several alternatives to help you overcome this difficulty. This could involve a loan buyback with more favorable conditions for a single loan or a consolidation of several loans into one. It is even possible to negotiate a new structuring of your loan to extend the repayment period and reduce the monthly payments.
When and how to contact the mediation service?
In the absence of a response from the bank within a month or in case of refusal, it is advisable to turn to the courts and seek mediation. This mediation is entrusted to approved professionals, such as bailiffs, lawyers, notaries, and public (CPAS) or private (ASBL) services.
Governed by the law of June 12, 1991, mediation aims to reconcile the interests of the debtor with that of the creditor. After estimating the income and expenses of the former, the mediator proposes a new repayment schedule that ensures the periodic repayment of the loan while allowing the debtor to lead a decent life. The collective debt settlement plan thus established is called amicable if accepted by all parties. It is called a judicial plan if imposed by the judge.
What about the mortgage loan?
The lending institution can take possession of the guarantees put in its possession in case of default by its client. This can involve collateral, wage assignments, or any other means of repayment. If this solution is not feasible or does not allow the lender to recover its due, a foreclosure of the mortgaged property can be implemented.
How to protect yourself from default?
A loan is a contract that binds the future borrower. Therefore, it is important to make an accurate assessment of your professional situation and repayment capacity before taking out a loan. The seniority and financial stability of the employer must be carefully considered to ensure that debts can be honored. It is also advisable, as far as possible, to refrain from taking out multiple loans at once.
It should be noted that there are insurances to protect against repayment difficulties due to life’s uncertainties. This includes the “Guaranteed Housing Insurance” for Flanders, intended for a loan with a term not exceeding 10 years, and the “free insurance against loss of income” for Wallonia, which covers an annual ceiling of €6,200 for a maximum of 3 years.
