Repayment Plans

Obtaining a loan has become quite easy. As long as you have a decent credit record, financial institutions are generally willing to lend money. This has led to some people over-committing themselves and thus they struggle to meet monthly loan repayment plans. Other people have obtained finance when they have been perfectly capable of making repayments at the time but have then lost their job or suffered a serious medical condition making monthly repayments difficult to meet.

If you are in such a situation, you may be able to negotiate a repayment plan with your creditors based on one of the following schemes:

• Fixed repayment plan – you make repayments at a fixed, but reduced amount over a longer period of time
• Variable repayment plan – you make a number of repayments based on future affordability
• Interest repayment plan – you continue to make interest payments but the capital is frozen until it is affordable again
• The first 2 repayment plans will typically involve a reduction or freezing of the interest for a period of time. However, as such an arrangement is not legally binding; your creditor can begin demanding full repayment at any time.

If you only have one or two creditors, or only expect to miss a couple of payments, this kind of negotiation may be your best option. If, however, your situation is far more dire, it is worth seeking financial advice in order to identify a repayment plan that can solve your debt problems outright.