What Should You Do If a Financial Crisis Prevents You from Repaying Your Loan? How Should You Restructure Your Debt?
In today’s volatile economic environment, many people may find themselves facing financial difficulties that make it impossible to keep up with loan repayments. This situation can escalate into more serious problems, such as lawsuits or even the loss of personal assets.
If you are currently experiencing such difficulties, do not panic. The best course of action is to negotiate directly with your financial institution (the creditor) to restructure your debt. There are several options available that can help ease the burden and make repayment more manageable.
Request for deferral of outstanding debt payment. In this instance, the debtor may request to repay the outstanding debt for a maximum of 36 consecutive months, requesting to divide the total outstanding debt into equal installments, which are then repaid consecutively every month, requesting to pay the entire outstanding debt at an agreed time, or requesting to pay the outstanding debt as a lump sum, divided into installments according to an agreed schedule.
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Request for loan term extension. Under this method, the debtor can request to extend the loan term up to 30 years from the present, in order to reduce the installment payments.
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Request for an additional loan to pay outstanding interest. This is a situation where the debtor is unable to pay all outstanding interest. The debtor can request an additional loan to pay the outstanding interest along with an extension of the loan term.
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Request to pay only the monthly interest. During certain periods, the debtor may request to pay only the monthly interest. Typically, this condition is offered only to debtors with a good repayment history.
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Request to pay less than the normal installment amount. This type of deferral condition usually stipulates that the payment amount, which is lower than the normal installment, must be at least 500 Baht more than the monthly interest. The repayment period can be for a maximum of 2 years, and this option can be exercised only once.
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Request for a special interest rate reduction. This is a deferral request in cases where the debtor's loan interest rate has been increased from the normal rate. The debtor can request a reduction in the interest rate on the payment due date.
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Request to temporarily transfer the house to the financial institution. In this case, the debtor can repurchase it later. Typically, the financial institution will accept the transfer of collateral by offsetting the debt by no more than 90 percent of the collateral's value. If there is any excess debt, the debtor must settle it completely on the day of transfer.
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Request for a stay of auction sale. In cases where a debtor whose assets have been seized by a financial institution is awaiting auction, they may negotiate for the sale to be postponed. This is provided that the debtor pays all court fees and expenses incurred during the lawsuit and enforcement proceedings in full, and makes debt payments for no less than 6 consecutive installments. Furthermore, the remaining debt must not exceed 80 percent of the new collateral appraisal value, after which the debtor must enter into a new loan agreement.
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Request for a stay of asset seizure. The debtor may request to postpone the asset seizure, provided that they pay all outstanding debt and redeem the mortgage within a period not exceeding 3 months.
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Request to change the debtor under a new loan agreement, increase the loan amount, or alter contract terms. The debtor must first pay all court fees and expenses incurred during the lawsuit and enforcement proceedings, and then comply with the conditions set by the financial institution.
See, there are various ways that can help us overcome a crisis. Don't panic, don't run away and let it become a non-performing loan (NPL), as this will damage your financial history. Keep a clear head. The most important thing is that you must go and negotiate, clarify the problem with your creditor, then study the details and choose the conditions that suit you best. By doing so, you will be able to solve the problem or lighten the burden.
Or, if you need a consultant, we at J.E.D.I. Asset Management are ready to advise you. With our understanding and professional experience, don't let your problems become chronic issues that are too difficult to solve. We are pleased to provide services and consultations to help solve problems alongside you.