What are the consequences for online loan defaulters in 2021?

Cooperation with microfinance organizations did not end well for all citizens. A common reason is dishonest and non-transparent credit conditions, deliberately included in the agreement, but left without explanation. As a result, the accrual of penalties and fines, many times exceeding the very body of the loan. Is it possible not to pay a loan legally? Yes, there are schemes that do not contradict the legislation. Of course, they do not exempt from debt, but they will help to cancel unfairly accrued interest for use.



Consequences of non-payment
Microcrediting is attractive with simple conditions for receiving money: a minimum of documents and speed. You don't even need to meet with an MFI representative: online lending is available from home or office. That is why citizens rarely perfectly study the terms of the contract, do not look at the interest rate and the terms of return.
Failure to pay a debt to a micro credit institution leads to the imposition of sanctions:

• from the first day of delay, a penalty is charged, the amount of which is established by the MFO and is prescribed in the contract;
  
• accrual is carried out within a specified period, which can be up to 2 months;
  
• MFO employees inform the debtor about the debt by telephone, messages, and also send information to relatives, neighbors, colleagues;
  
• in the absence of any action on the part of the debtor, the case is transferred to a collection firm that practices harsh and incorrect methods;
  
• The MFI takes the debtor to court, which often leads to lengthy litigation.
  
• MFOs also transfer information to the Bureau of Credit Histories of Ukraine, which negatively affects the reputation of a citizen and the possibility of further lending in any financial institution.
  

Online lending: is it possible not to pay a loan in Ukraine?
The law of Ukraine exempts military personnel from the accrual of interest and penalties for loans. This is regulated by Art. 14 p. 15 of the Law of Ukraine "On social and legal protection of servicemen and their families." In relation to other borrowers, they can also defend their rights regarding the write-off of improperly accrued interest, relying on the following points:
According to the law, after the expiration of the loan term (specified in the agreement), the MFO is not entitled to charge interest, but if the client has not issued an extension. In this case, the law is on the side of the credit union.
According to the Law of Ukraine "On Protection of Consumer Rights", on the 4th, 30th and 90th days of delay, the MFO has no right to apply penalties. This can significantly reduce the amount of debt.
In the event of a trial, a well-formed line of defense makes it possible to cancel the accrued fines, which are dozens of times higher than the body of the loan. Lawyers offer 4 legal ways:

1. restructuring;
   
2. refinancing;
   
3. bankruptcy;
   
4. recognition of the contract as invalid.
   

All methods allow you to write off illegally accrued interest, but will not exempt you from returning the body of the loan.



Restructuring
Debt restructuring is a set of measures that relieve the debtor's credit burden. The MFI can propose a change in the payment schedule, extend the loan repayment period, and the like. This method does not exempt from the payment of the entire amount of debt, but by reducing the amount of repayment, it makes it possible to return it in full within a specified period.
The basis for restructuring is:

• illness of the borrower or his close relative;
  
• loss (death) of close relatives;
  
• job loss and problems with new employment;
  
• decrease in wages.
  

For registration of debt restructuring, the case must be documented. The main benefit of restructuring is the ability to get out of debt and avoid legal red tape.
Loan refinancing
Refinancing is a refinancing procedure in another financial institution on more favorable terms. The lender undertakes to pay off the problem debt to the MFI and provide the client with a more convenient debt repayment schedule on optimal terms, and the client undertakes to pay the loan body and interest.
For refinancing, it is necessary to find a banking or non-bank structure that provides such services and provide the necessary documents. The chances of getting a positive answer increases a permanent place of work, a stable monthly income, the presence of movable or immovable property.
Refinancing is a rational solution for clients who cannot temporarily make payments. This will avoid delays and get into a debt trap.


Bankruptcy
Only a court order can make an MFI repay the debt. In all other cases, financial institutions do not have the right to insist on the need to pay off debt immediately, especially if an individual is bankrupt. A person who meets the following criteria can prove his / her bankruptcy:

• unstable financial situation - lack of work, very low income, and the like;
  
• unsatisfactory state of health, requiring large financial costs for treatment, rehabilitation;
  
• loss of property as a result of natural disasters, accidents, hostilities.
  

From the moment the bankruptcy proceedings are opened, the accrual of interest, fines and penalties on the loan ceases. As a result of declaring the debtor bankrupt, all debts, except alimony, are canceled.
Loan agreement
Recognition of a loan agreement as invalid is the most effective way to avoid accrued interest, fines, and penalties. Only a court can recognize a document as invalid on the basis of where and what factors:

• the lack of a license for the MFO to provide loans;
  
• non-compliance with the form of the transaction;
  
• violation of the rules for granting loans;
  
• violation of the rules for drawing up and signing an electronic contract.
  

Also, the debtor can always file a counterclaim against the creditor or the collection company, or buy back his debt from the company before litigation. Lawyers recommend that MFI clients constantly monitor the situation: check the register of court decisions and the Unified Register of Debtors in order to avoid problems when applying for a loan in other financial institutions.