Debt help for a personal loan that you’re failing to maintain
Bank Loan Debt overview
Personal bank loans provide a cash lump sum that is repaid over a fixed period at a set amount each month. They aren’t secured against an asset, such as your home, which is why they’re also known as an unsecured loan.
Bank loans are non-priority debts, and so you should always focus on keeping up on payments on priority debts before paying your bank loan.
The advantages of Bank Loans as a credit solution
- Bank loans are convenient and accessible.
- Personal loans are a good way to consolidate your debts and manage your finances more effectively (providing that you don’t run up your credit again once your debts are repaid).
- Bank loans usually allow you to borrow more than other forms of credit – such as credit cards or overdraft.
The disadvantages of Bank Loans as a credit solution
- Generally speaking, bank loans are only approved for those with a reasonable credit score. For those who have a poor credit history, they may find themselves rejected or they may have to pay a higher rate of APR.
- As certain lenders provide lower APR rates the more you borrow, you may be tempted to apply for an amount that you don’t really need.
Worried about debts that won't go away?
Debt help tips for tackling Bank Loan Debts
- First things first – you need to be aware of what happens once you miss a repayment. If you fall behind on your payments, you should speak with your lender. At this early stage, they’ll be more open to discussions as to how they can help, while your credit record won’t have been damaged significantly by your missed payments.
- If you don’t come to an arrangement with your lender and continue to miss repayments, your account will default, this usually occurs after 2 to 3 payments. Your creditor may then:
- Send reminder letters
- Call you
- Add additional interest and charges to your loan
- Take further court action, such an applying for a County Court judgment (CCJ)
- The debt could eventually be passed to a debt collection agency
- Speak with an impartial debt agency or charity as soon as you can to understand your options. You may want to start your research with our debt solutions page.
IVAs – A potential debt solution for problematic bank loans
If your bank loan and other debts total to more than £5,000 and you’re struggling to maintain your payments, it could be time to shake up your finances.
An Individual Voluntary Arrangement is a form of debt settlement increasingly being used as a solution to dire financial circumstances. IVAs last for either 60 to 72 months and can include many forms of debt. Repayments are based upon what you can afford, and your creditors aren’t allowed to contact you for the duration of the IVA, except to provide you with statements. Dealing with your debt problems – A step-by-step