Run The Money
Follow Run The Money

Remedies for Individuals Who Can’t Pay their Loans

  • April 27, 2020

If you're reading this, I'm earning money in some way. I was compensated with money and/or product. Thanks for helping to feed my family. I also may have a financial interest in companies named. Please see our disclosure for more information. Also, any advice provided is for informational purposes only. I'm not an accountant, lawyer, doctor, fitness expert, or nutrition specialist. So, talk to a professional before acting on anything you read, watch, or listen to below. Get your own advice and do your own research. Email me at [email protected] with questions.

Remedies for Individuals Who Can’t Pay their Loans

It’s a good thing that some states and governments issued a proclamation demanding all businesses to postpone payment of utilities and repayment of loans in the midst of the pandemic. Then again, not every state or city copied this move, hence, there are still those who will have to endure both -- battling the disease and paying their piling debts. If you find yourself in this situation, fret not. You are not alone and there are legal remedies you can take to save yourself from this financial mess.

For one, you can apply for a consolidated loan to allow you to pay off all your existing small loans and focus on a single loan. Next, you can also file for a loan extension and cite force majeure as the reason for the extension. You see, you have a lot of options and in this article, we’ll tackle them one by one. Let's address a few remedies for individuals who can't pay their loans or other debt.

Leave it as is

When we’re left to choose between life and paying obligations, we normally gravitate toward the option that allows self-preservation. In this most trying time, a lot of work and businesses are suspended. People can’t function like they normally do or go out to find the means to earn money. Everyone is aware of this health crisis, so it’s understandable that people’s money often goes to food and groceries instead of paying what they owe. Your priority now is to keep yourself and your family healthy and safe. Debts can wait.

Apply for a consolidated loan

If your lender is quite strict and won’t budge even if you beg them for reconsideration, your safest option is to consolidate your loan. There are numerous companies that specialize in debt consolidation. They function by buying out all your outstanding small loans and allow you to focus on paying one bigger loan payment. The good thing about this kind of loan is they alleviate your burden by saving you from a higher interest rate imposed by your previous debtor. With consolidated loans, the interest rate is usually lower. So, even if you have to pay back the loan at a later date, you won’t have a hard time repaying.

Just one tip when applying for a consolidated loan -- make sure to include all your outstanding smaller loans. If you have too many loans from different people and lending firms, there’s that added burden of a shifting focus. If you can’t pay on time, you need to talk to different people, too. This can easily stress you out. If you opt for a consolidated loan, you only have one lender to worry about. If you need to negotiate, you will only have to talk to one person. It’s way easier than spreading yourself thinly among different lenders.

Negotiate with your creditors

If you suddenly got laid off because your company can no longer operate, there’s no point in stressing about how you can pay your debts. If you only have money for food for a week or a month, try negotiating with your creditor. Tell them about your predicament and negotiate when you can pay them back. Most of the time, creditors can also extend leniency because their main goal is to get their money back and profit from the interest that will accrue. When you negotiate with them, be honest and realistic so that you won’t have a hard time repaying it within the timeframe that you committed. Also, go all out. Think of your financial capacity. Don’t be shy to ask for a waiver of interest. If they can waive it, that’s one less burden for you. If not, lobby for a lower interest rate instead.

There is always a light at the end of the tunnel. If you’ve been suffering financially due to piling debts, you can put an end to your misery. Ask the right people and work with lending firms that can empathize. You’ll see that just like this global health crisis, your financial worries will also pass.