Advice for potential loan defaulters
By Tomas Iindji
AS the country is experiencing financial difficulties and in a bad financial situation you need to approach your bank for help before you default on your payments or before things may south.
You may find that the Bank is willing to help you if you are experiencing temporary financial difficulty and there it is imperative to make this engagement as soon as notice adverse signals in your cash flow cycle.
There are many factors that can be taken into account when the bank analyses your financial situation and considers whether it will be viable in a long run for them to extend assistance.
If you find yourself in a bad financial situation, here’s what to do and some tips:
It’s natural to stress when your finances are in a mess. But panicking won’t fix anything or help to improve the situation. In fact, panicking can cause you to make some poor decisions that can make your current situation even worse.
Try not to panic. Instead, start thinking about how can you turn your situation around. No matter how bad of a situation you find yourself in, you can always reverse your financial situation. It’s only as temporary as you make it.
Dip into your savings
If you have an emergency or reserve fund, now is the ideal time to put it into action. While it is never fun to have to spend the money you worked hard to save, it’s better to use the cash you have available instead of relying on additional credit or facility.
Cut back on spending
Next, take an in depth look at your budget. See what expenses you can cut back on, or better yet, cut out entirely. Essentially, you are trying to find spare cash within your budget. Unnecessary expenses, such as shopping, eating out, and entertainment are likely line items that you can cut out for the time being. And don’t forget to see where you can cut back on your necessary expenses.
Talk to your banker, most importantly
If you’ve tried everything and still have bills that you are unable to pay, it may be time to face up to your lenders. Though it won’t likely be a fun conversation, if you can’t pay a bill, a Bank wants to know about it. Some Bank Managers will even work with you to set up a payment plan. It’s not ideal, but it’s better than simply ignoring the problem, which can get you into major financial and legal trouble.
Give your lenders or bankers a call and let them know what’s going on. If you have some extra cash, see if you can at least make a partial payment until you can get them the rest of the money you owe them very important.
Prioritize what you can
What bills do you owe in the short-term? Which ones are most pressing to pay? Make a list of all of your bills, how much and when they are due, and then reorganize them to put the highest priority bills at the top of your list.
Disclaimer: The views and opinions included in this message belong to me as PhD candidate and do not necessarily mirror the views and opinions of my employer.