How to consolidate loan debt? What documents are needed for consolidation?
How many times can I do this procedure? In which cases it is profitable to consolidate the debt, and in which not?
Loan consolidation is a change in the terms and conditions of a valid loan agreement (extension of the loan term, deferred payment of debt, reduction of interest on a loan, replacement of currency) to facilitate debt repayment to borrowers in difficult life situations.
When incomes have fallen, overdue loan payments are becoming commonplace, debt is growing like a snowball and there is no way out of this situation, the best option would be to change the terms of the loan.
Not every bank in such a situation willingly goes to meet the client. To increase your chances of success, it will be useful to know what a loan consolidation is, under what conditions it is possible, and what ways there are to convince a lender to consolidate exactly your loan.
When consolidation is required
Experts recommend contacting for consolidation as soon as you feel that it is about to become impossible to pay the loan.
For example, if you were fired from your job or you went to a long hospital . To be ashamed of nothing: for bank employees, such requests from borrowers are common. You still have no overdue debts, there are more chances to consolidate a loan on decent terms.
Another thing is that not every bank will agree to change the parameters of the loan.
The bank itself appeals to the client with a proposal to change the terms of the contract if there is a delay (usually from two months), and the client does not have liquid property that could be recovered as payment of the debt.
Here are a few conditions, without which your application for consolidation will not even be considered:
- documented valid reasons for the borrower (a sharp reduction in income, dismissal due to the closure of the organization, etc. – see the full list below);
- the client has not previously consolidated or refinanced loans (the use of the “credit vacation” service in its various forms is also taken into account, so be careful);
- prior to the current loan, the borrower did not have late payments;
- client age does not exceed 70 years.
What benefits can consolidation loan bring?
By reducing the monthly credit load, the borrower is able to:
- Do not ruin the irrevocable credit history (usually data on delinquencies lasting more than 2 months are transmitted to the National Bureau of Credit Histories;
- to avoid legal proceedings with a bank (for a credit history, this is a mortal sin, and few people like to participate in litigation);
- save your property from enforcement;
- repay the loan at a new due date.
Whose loans can be consolidated
Banks have a list of categories of clients that can be included in consolidation programs. Among them:
- laid off employees due to reduction or closure of an organization;
- Employees who have been formally notified by the employer of a pay cut;
- SP, whose business suffered serious losses;
- owners of foreign currency loans affected by the devaluation ;
- affected by natural disasters and major accidents.
Several other rules apply when considering consolidation for mortgage holders. Here are the factors:
- housing purchased with a mortgage should be the only one;
- net income for each family member (excluding mortgage payments) – no more than three minimum wages ;
- There is no property that can be used to repay loans (car, securities, real estate).
How is the loan consolidation
1 Fill out the form of the bank. It contains information about the loan, the monthly payments, the reason why the borrower applies for consolidation. You must also inform the bank about your income (provide a 2-NDFL certificate to assess the dynamics of income), major expenses and available property.
With the consolidation of the mortgage provided documents for the acquired property. In addition, most banks provide an opportunity to choose a specific way to change the terms of the contract. Far from the fact that this wish is realized, but one way or another your opinion will be taken into account.
2 We transfer the questionnaire to the department for work with credit debts .
3 We meet with the bank manager , we repeat everything that was written in the questionnaire. Together we choose the most suitable consolidation scheme.
4 We write an application, we attach documents (a copy of a passport, a loan agreement, certificates confirming changes in the level of income).
5 In the event of a positive decision is made a new agreement. It is prescribed consolidation scheme. Please note: if you had a guarantor under the consolidated agreement, it is impossible to start the procedure and make another contract without his consent.
Before signing, make sure that the previous agreement is closed (usually a corresponding certificate is issued), and you are satisfied with the payment schedule for a new document. If you are offered to first sign, then print the schedule – do not agree, ask for full information.
If received a refusal, ask to issue it in writing with indication of the reason. Sometimes it helps in the subsequent trial process. Your obvious desire to repay the debt with a confirmed unwillingness of the bank to create conditions for this may be the reason for the court to oblige the credit organization to consolidate the loan.