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Bank Loan Debt

How Bank Loans Can Lead To Debt

How Bank Loans Can Lead To Debt

We’ve sought loans from banks for centuries. In fact, figures from the Bank OF England illustrate that billions of pounds are being lent through unsecured loans every month.

When applying for a bank loan, the application process will take a variety of different factors into consideration. However, sometimes, the unexpected happens and you might be unable to make a payment. Alternatively, interest rates may increase and make paying off the loan an unlikely idea.

If either of these situations happened to you, you’re not alone. Every day, we hear stories from people who have got into debt through bank loans.

We’ve helped them, we can probably help you too.

What happens if I can’t pay back my bank loan?

If you can’t pay back your bank loan, and start missing payments, you could:

  • Be charged a late fee as well as additional interest
  • Suffer legal action in the form of a county court judgement
  • Risk losing your possessions and assets

The problems only multiply with the number of missed payments. However, if this starts to cause financial harm, and you struggle to make the payments, an IVA (individual voluntary arrangement) could be the solution to getting your finances – and life – back on track.

What is an IVA?

An IVA is a legally binding agreement between you and your creditors. In the case of multiple bank loans, these would be the institutions themselves. Set up by a qualified insolvency practitioner, the aim of an IVA is to help pay off your debts at a rate you can afford.

If there are still outstanding funds remaining by the time the IVA ends (usually about five or six years), these are typically written off.

While an IVA is not the ideal solution for everyone – and there are others available – it can be an effective way to deal with unmanageable bank loans.

Can I get a bank loan after an IVA?

After the IVA ends, and your debts have been resolved, you might consider taking out another bank loan – for example, to buy property through a mortgage. Although there is nothing stopping you from applying for a loan straight after an IVA, the details of the agreement stay on your credit file for six years after the start date.

As this will have a detrimental effect on your credit rating, banks are unlikely to approve the loan until your score improves.

Fortunately, this should happen in time and you’ll be able to apply for a new bank loan eventually.

Deal with your bank loans today

With more than 15 years’ experience helping people with their debts, we’ve heard just about every story and listened to every situation. When bank loans start becoming unmanageable, it’s best not to suffer in silence and act as soon as possible.

Complete an application form today and we can determine whether an IVA is the right solution for you. Alternatively, call us on 0161 956 2691 and we’ll be happy to have a no-obligation chat about your circumstances.

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