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The war significantly worsened the financial condition of many Ukrainians, which negatively affected the ability to repay loans and microloans. This problem worries almost everyone now.
The reasons for the population’s financial problems were:
- mass unemployment due to the destruction of enterprises;
- economic crisis – a reduction in production, exports, and investments, which reduced people’s incomes;
- growing costs for medical care of the wounded through recent savings;
- forced population migration associated with additional expenses.
Because of this, the question has arisen: is it worth taking new loans under such conditions, and what to do with those who already had loans and microloans before the start of hostilities and are now unable to repay them? After all, banks legitimately demand the return of issued funds.
Wartime loan default risks
On the one hand, the legislation provides for certain relaxations regarding loan payments during the period of martial law, which can be interpreted as the fact that banks cannot apply penalties for late payments or charge interest. The interest rate on the loan also remains unchanged. But on the other hand, if you still do not pay at all, without agreeing with the bank, it can lead to the fact that the loan is recognized as overdue, which will negatively affect the credit history.
In addition, after the end of martial law, the bank can apply financial sanctions, turn to collectors or even the court to collect the debt. Therefore, it is better to try to agree with the bank on debt restructuring or postponement of payments to a later date after the end of hostilities.
Is it possible not to pay the loan during the war?
Formally, it is impossible not to pay for a loan in full during the war. Although fines have been canceled for overdue payments, the debt itself will have to be repaid.
According to the law adopted during the period of martial law, banks do not have the right to charge fines or penalties for late payment of loans. However, the principal amount of the debt and accrued interest remain valid.
Therefore, if there is an opportunity to continue paying on the loan, it is better to do so. After all, after the end of the war, all debts to the bank will still have to be returned.
An alternative may be to arrange a credit holiday, which involves a temporary postponement of payments. The decision to grant such vacations is made by the bank.
How to write off a loan during the war?
Therefore, to write off a loan in wartime, the borrower must:
- Contact the bank with an official statement about writing off the loan.
- Submit documents confirming the fact of destruction or damage to the home/car that was collateral for this loan.
- Prove that the mentioned real estate or vehicle was the only one in his ownership.
- Confirm the purpose of the loan itself and the absence of debt at the beginning of the war.
Only if a full package of supporting documents is provided, the bank will be able to cancel the debt under the credit agreement. Instead, the bank will receive compensation from the state.
Alternative ways of writing off loans in wartime
First, you can apply to the bank to change the loan repayment terms – to extend the term, reduce monthly payments, etc. Banks are also required by law to write off illegally accrued fines and interest.
Second, an option is to declare personal bankruptcy through the court. If it is proven that a person is unable to pay debts for a long time, the court can write them off in whole or in part.
After the bankruptcy procedure, a person receives a “clean” credit history and the opportunity to start all over again. After all, all negative information about debts and defaults will be removed from the credit bureau.
In this way, it is possible to get rid of the excessive debt burden caused by the crisis conditions of the martial law in the country.
If you need help or need to protect your rights, the specialists of the company “Prykhodko and Partners” are always ready to help you. A pleasant atmosphere of communication, clear wording and solution of your question – this is about the lawyers of the company who will help you in such a difficult time.