What if I Can’t Pay Back my Personal Loan?

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Personal loans, unlike student loans, mortgages, or auto loans, can be used for almost anything. If approved, you receive a lump sum that must then be paid back in monthly installments. From big purchases to home renovations to consolidating debt, a personal loan can be a useful financial tool. But sometimes, as with anything else, “life happens.” Unexpected financial difficulties like a pay cut or medical expenses can disrupt even the most carefully planned budget. When a financial set-back occurs, it can be difficult if not impossible to keep up with bills and payments. Often, it is loans and credit cards that are the first payments to be put off. What do you do if your situation has changed since being approved for a loan and you can no longer make payments on your personal loan? Today we’ll give you a few examples of steps you can take to remedy the situation.

While most people are reluctant to talk to their lender in the event of a financial set-back, this is often the best thing you can do. In fact, most lenders will respect a proactive approach to handling the situation and appreciate your dedication to paying back the loan. The sooner you make your lender aware of the problem, the more likely they are to work with you. On the other hand, simply ignoring missed payments can result in an accumulation of late fees, collection efforts, a drop in your credit score, and even default. If there is a valid reason you cannot make the payments, your lender should understand and work with you to find a mutually agreeable solution.

Once you have taken steps to make your lender aware of your situation, they may be willing to revise the terms of your loan to make monthly payments more manageable for your new financial circumstances. Lenders who are willing to negotiate will look at your expenses, other debts, and income to determine a more realistic monthly payment. So while the total principal of the loan will remain the same, payments can be made more affordable. The solution might even be as simple as changing the monthly due date of the payments to a time when it does not conflict with other bills. You may even be able to negotiate a deferment on your payment—it doesn’t hurt to ask!

If your lender does not work with you to revise the terms of your loan and is still demanding on-time payments, you will have to find different ways to make the payments. Consider areas in your budget you could cut back on, even if it is only until you’ve paid back the loan. Determine which expenses are necessities (like food, utilities, transportation to work, etc.) and which are extra. If it is possible, try selling high dollar items, like a second car. You may even consider doing side work or getting a part-time job to help offset the cost of the loan payments. Explore all of your budget-revising options to avoid missing payments.

In the event you still cannot afford to make the payments on your loan, don’t assume all hope is lost. When you’ve done all you can do to remedy your finances and you’re still struggling, it is time to reach out for professional help. At Veitengruber Law, our team of experts has years of experience dealing with difficult lenders and assisting borrowers in getting back on the right financial track. We will negotiate with lenders on your behalf to find effective solutions for real financial relief.

We understand that not every debt problem is the same and we will work diligently to come up with a customized solution for your specific situation. Bankruptcy is not the only solution to unmanageable debt, although it may be the best solution for your circumstances. Our team will perform a holistic financial analysis to help you make informed choices about your financial future.

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My Ex Owes Me Money: Will I Ever Get it Back?

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Often times, when a married couple decides to split up – the dissolution of the marriage takes a significant amount of time. This lag period can be extremely difficult for people who are ready to move on (and away) from each other. In fact, many divorcing couples actually end up living together for much longer than either party would like – due to entangled finances, lack of substantial income, shared debts and convenience.

It’s a rare couple who can make it through a time period like this without at the very least getting into some heated arguments. Knowing that you’re no longer a romantic couple but having no other option but to continue living under the same roof can create an amazing amount of psychological strain. This can lead to increased fighting or deafening, never-ending silence.

On the other hand, there are couples who mutually acknowledge their need to “uncouple.” While recognizing that they are no longer working well as a pair, they still manage to remain civil and often even remain friends. Obviously, this type of split is preferable to the former, more contentious model, but it does invite problems of its own.

As romantic love fizzles out and a more business-like relationship takes hold, discussions shift from sharing your inner thoughts to who’s going to pay which monthly bills before the divorce is final and the Property Settlement Agreement is in place. It is during this delicate time period that clear communication is needed more than ever before, especially regarding finances.

I lent my ex money during our separation: will I ever be able to get it back?

Sharing finances is extremely common in the months/year (or so) after a couple has made the decision to divorce. Entangled bank accounts and bills are sometimes the last things to separate during a split, especially if one spouse makes significantly more money than the other.

During this very sensitive time, it’s quite common for the spouse with the higher-paying job to help out the other spouse until s/he can get back on track. What may have been normal financial practices during the length of the marriage may now take on terms like “loan,” “borrowing” and “I’ll pay you back.”

It’s fantastic if a divorcing couple can manage to put their differences aside in order to see each other to the finish line with both parties in good financial standing. Something important to know, however, is that it’s kind of impossible to “loan” your legal spouse money. As long as you were still legally married, there is no such thing as “loaning money” from one party to the other. All money within the marriage belongs equally to both spouses until such time as the Final Judgment of Divorce is received.

If you’ve lent money to your “ex” when s/he is technically still your spouse, chances are high that you’ll never see that money again. Count yourself lucky if your “ex” is a good-hearted person and at some point in the near future has the ability and the desire to settle up any ‘oral agreement’ loans that were negotiated during your separation.

 

Image credit: Quazie