Need to Repay Your debt! Methods of coping and actions

Some individuals may find themselves in debt due to large purchases or gambling. Being in debt itself is not a significant problem, but the inability to repay the debt can potentially lead to major issues in the future. Therefore, this time, we will explain countermeasures and prohibited acts that should never be done to those who are troubled by the inability to repay their debts. Before resorting to prohibited acts out of desperation because of the inability to repay the debt, please take a look at the following information.

 

What happens when you can't repay your debt?

When you are unable to repay your debt, you may be afraid that you will be threatened by scary individuals like those in manga or anime. However, in reality, reminders are sent in stages before such situations occur.

So, what happens when you cannot repay your debt? Below, we will introduce the details.

 

1-1. Notice of delinquency is received

When you are unable to repay your debt, you will receive a notice of delinquency. The most common reasons for debt delinquency are "insufficient funds in the account," "mistake in repayment amount," and "forgetting the repayment date," which are often due to basic problems, so initial confirmation contact will be made.

 

The method of contact for the notice of delinquency varies depending on the creditor, such as by postcard, SMS, or phone call. Even if you receive a notice of delinquency, in most cases, there will be no major problems if you pay immediately.

 
1-2. Late payment damages occur

When the repayment is delayed, you will be asked to pay late payment damages. Late payment damages are damages claimed when the repayment is delayed. When the repayment is delayed, you must pay not only the usual repayment but also the late payment damages. Be careful as the total amount of repayment will increase.

 
1-3. Reminder letter or demand letter for repayment is received

If you do not make repayment even after receiving a notice of delinquency, you will receive a reminder letter. The reminder letter contains the payment details, including the payment deadline, late payment damages, and fees, and is sent by postcard or envelope. Reminders can also be made by phone in addition to the paper format, and they are often done regularly until the delinquency is resolved.

 

If you still do not make repayment after receiving a reminder letter, you will receive a demand letter (reminder letter) by registered mail. The demand letter is a legal measure that is taken before the recovery action is escalated, urging repayment of the debt...

In cases where you cannot repay debt, there are actions you should absolutely avoid, which we will introduce as "NG" actions.

 
2-1. Ignoring reminders

Ignoring reminders when payment is delayed is an action that should not be taken. We understand that you may want to ignore it because you do not have the money, but the more you ignore it, the more the situation will deteriorate.

 

For example, a reminder postcard may turn into a phone call to your personal phone or workplace, and if you still do not respond, your family or workplace may be contacted. If you do not want your family or workplace to know about your debt, especially, you should stop ignoring reminders in the early stages.

 

2-2. Borrowing more to repay debt

Borrowing from somewhere else to repay debt is very dangerous. As the number of loans increases, the repayment burden will only increase. Furthermore, when you lose your peace of mind due to anxiety about not being able to repay your debt and cannot make the right judgments, there is a risk of receiving additional loans from illegal lenders.

 

2-3. Using a credit card for cashing out

Cashing out a credit card means buying something such as a Shinkansen ticket or brand goods with a credit card and selling it immediately to make cash. Cashing out a credit card violates the terms and conditions.

 

Also, since you are only postponing repayment until the following month or later by using a credit card, the burden of repayment remains unchanged.

 

Is bankruptcy the only option?! I want to know what to do

If you absolutely cannot repay your debt, is bankruptcy the only option? Let's look at the options, including bankruptcy, below.

3-1. What is bankruptcy?

Bankruptcy is a procedure that allows debtors to be exempted from repayment obligations when it is determined that they do not have the ability to repay their debt. Bankruptcy has a negative image, but it can be an effective solution to help creditors rebuild their lives.

 

When you file for bankruptcy, you will need to give up certain assets such as your home or car, but items that fall under "assets that are prohibited from seizure" or "free assets below 990,000 yen" are exempt.

To repay a debt, it is important to understand the current situation, such as income and expenditure, and to make a concrete repayment plan. When considering a repayment plan, calculate each lender's total debt, monthly interest, repayment completion date, and monthly repayment amount calculated by subtracting living expenses from income. To understand the contract details and repayment status, it is recommended to request disclosure of transaction history from the creditor.

 

By making the amount clear, let's create a specific repayment plan. Additionally, to progress the plan smoothly, it is necessary to improve habits such as shopping addiction that cost money.

If it is difficult to repay the debt, consult with the lender's financial institution first. Since financial institutions deal with many debtors, they may propose repayment methods that are optimal for you, such as reducing interest or long-term installment payments.

In cases where debt repayment is difficult, using a Credit Saison consolidation loan is also recommended. The Credit Saison consolidation loan can reduce interest and monthly payments by consolidating multiple loans into one.

However, only borrowing from money lenders is eligible for consolidation, and borrowing from bank loans or credit card shopping is not eligible. If you call to discuss your situation, they will propose a plan that will make it easier for you to repay in the future. For more information, please check the following URL.

Consulting with experts such as lawyers before considering debt restructuring is also an effective method. When consulting, it is recommended to choose a lawyer who specializes in debt restructuring or debt issues. Some firms offer free consultations about debt. Let's take a look at the benefits of consulting with experts such as lawyers.

Related Article: How to maintain a good credit score for bank as a student