A person who can no longer repay their loan must react as quickly as possible 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 a way out of the crisis.
The right reactions to have from the start
As soon as you experience difficulties in repaying your loan installments, you should discuss it with your bank or the lending institution. This involves, concretely, explaining your situation by sending a registered letter and requesting a reduction or postponement of repayments.
Banks have several alternatives to help you overcome this difficulty. This could involve a loan buyback with more advantageous conditions for a single loan or a consolidation of several loans into one. You can even negotiate a new structuring of your loan to extend the repayment period and reduce the installments.
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 justice system and resort to the mediation service. This mediation is entrusted to accredited professionals, namely 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 in its possession in case of default by its client. This could involve a guarantee, wage assignment, or any other means of repayment. If this solution is not feasible or does not allow it to recover its due, an execution seizure of the mortgaged property can be implemented.
How to protect against default?
A loan is a contract that commits the future borrower. It is therefore important to make an accurate assessment of one’s professional situation and repayment capacity before taking out a loan. The seniority and financial solidity of the employer should be carefully considered to ensure the ability to honor debts. It is also advisable, as much as possible, to refrain from taking out multiple loans at once.
It is important to know that there are insurances to protect against repayment difficulties due to life’s uncertainties. This includes the “Verzekering Gewaarborgd Wonen” 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.