No one is shielded from financial difficulties. You can devotedly pay your mortgage but one day it may turn out that you became a debtor because of a job loss, illness, or other problems. No worries, there’s always a way out.
Unfortunately, many people who faced debts are making careless decisions and getting even deeper into trouble.
Check out three common mistakes debtors make and try to avoid them.
Mistake 1. Take out a new loan
Often run by panic and stress, borrowers taking out new loans just to pay back overdue debts. Without thinking much it seems like a good solution – by borrowing again, you will buy some time, find the money and pay off it all.
So, what’s wrong with that? Even bigger risks are hiding behind this decision: sooner or later, it may lead to a wicked circle. You may simply face a “snowball” of debts because, as a rule, money runs out super quickly.
So, what to do? Call your bank and find out if they providing a restructuring service. It can help reduce your debt amount while you facing financial difficulties.
Mistake 2. Doing nothing
It’s hard to believe, but some borrowers prefer to pretend like nothing is going on and just wait until their problem will resolve itself in some magical way. Maybe they think that the bank will forget about their debt?
Obviously, that’s a huge mistake. A delayed mortgage payment will surely lead to fines and ruin your credit history. Moreover, penalties will increase the cost of servicing the loan, and bad credit history will lead you to rejection of a new loan in the future. Also, the bank has the right to go to court with your case.
What to do? Don’t let the panic freeze you. Even one missed payment is a problem. If you have problems with the loan, don’t hide them from the loan officer. Usually, banks are helpful, they probably will offer to reduce the credit amount for some time.
Mistake 3. Hiding from the bank
Surprisingly, some people firstly telling the bank about a problem and then just don’t pick up the phone or leave their loan officer on-read.
This is a bad strategy. Remember, the bank is always ready to help the client. They will offer you to consider an application for loan restructuring. But if the person vanishes, the bank won’t be able to help.
What to do? Don’t hide. You won’t stay alone with the problem. It is important to collaborate by answering calls or e-mails and listening to possible solutions. There is sure to be a way out!
Keep in mind:
Banks usually cooperate with their clients and offer them ways to deal with any problems. The sooner you tell them about the difficulty, the better.
If you received a call from a debt authority, don’t panic. Answer with a calm voice, explain the situation, and assure them you’re on the way to make it up.
Even small delinquency affects your credit history.
Inform about any changes in your personal information – new phone number or address.
Should you have any questions please do not hesitate to contact the LBC Mortgage consultant.