Moratoriums on loans?

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typeonegative

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I just got notice that I am being laid off in the new year. I have no protection payment on loans I have. How amenable will the bank be if I request a moratorium on my loans until I get another job? Where can I find more info? How do I best put forward the request? thanks
 
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Sorry for your troubles. For what it's worth I've been there myself and know that it's not the end of the world.

If you anticipate that you may have problems servicing your loan(s?) if you are unemployed for any period of time (e.g. you don't have significant savings from which you can repay loan(s)) then it would be advisable to inform your lender(s?) sooner rather than later rather than waiting until you get into difficulty. Best to make an appointment with a representative and explain the situation to them. They will generally appreciate you coming to them first and may be able to offer some flexibility. However make sure that they don't try to sell you someting that you don't need or screw you (e.g. in terms of higher interest costs) as a quid pro quo for any flexibility that they do offer you. If in doubt post details of anything they offer you here for comment.

Maker sure to claim any benefits (e.g. tax reclaim during unemployment if applicable - form P50, unemployment benefit/assistance, other SW entitlements etc.) while you are unemployed.

Some useful links:
www.mabs.ie
www.fool.co.uk/debt/debt.htm
 
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Fully agree with Skinflint's post and the only thing I would add is that you should remember when talking to your lender(s) that the very last thing they want is a bad debt. A debt is only bad when the borrower fails to repay so it is also in the interests of the institution (and the staff that approved the loan) to restructure your debts in such a way that will allow you to repay when you get a new job. You will not be asking for anything unusual or unreasonable.
 
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Also you could consider switching your lender. Get a settlement figure from your current lender and try to borrow that much form another lender. this often involves a one month or two month payment holiday at the start of the loan or if not automatic the new lender may agree to it if you ask.

Good luck.

-Rd
 
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Hmmm... switching lenders only really makes sense if, after the cost (legal etc.) of switching is taken into account, one would save on overall interest costs with the new lender over the remaining term of the mortgage. It doesn't really make sense to remortgage simply in order to take advantage of a few week's payment holiday. Somebody who is about to be made redundant is unlikely to have the resources to pay remortgaging costs up front anyway. Maybe I've misunderstood the advice here or something...
 
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Switching lenders will probably not be possible and may not be appropriate in this case. Don't forget any new lender will want to have details of current employment and may ask the reason behind the switch. In any case, I would expect your existing lender to be quite flexible and agreeable with postponing a number of payments until you start your next job.
 
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I got the impression from the first post that it was more short term loans rather than mortgages that they were talking about so I think this is where Rd is coming from.
 
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Thanks for the advice. I have 2 car loans, credit card debt and a current account overdraft totalling somewhere around 15,000E. I don't have a mortgage yet but I'll be needing one next year to renovate property I'm set to inherit. Maybe this could this be afactor/tool for negotiation...? Thanks again
 
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It might be a good idea to do up a budget detailing your monthly incomings and outgoings (see the MABS budget form for example) and see how things stand now and how they might be affected by being unemployed for a time. It might help you identify where to savings can be made and where to concentrate your efforts on managing your debts. If you approach your lender(s) about the outstanding debts they will most likely look for this information in some shape or form anyway. You should see if there is some way to reduce the ongoing cost of your accumulated debts without ending up paying more in the long run. Post more specifics about the outstanding debts (amounts, rates of interest charged) and any other income or savings if possible.
 
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My original comments were about short term debt, but you might actually have trouble getting a lender to accept you with debts like that, no house, and no job.

I think you need to go into short term crisis management mode. Contac the creditors as soon as possible and ask about a payment holiday, or even a period where you only pay the interest.

Contact MABS.

And if you take only one piece of advice/comfort it's this:
Debts are much easier to deal with if tackled head on and quickly. You may find you hate opening letters because it's always bad news. You'll know you've gotten things under control when you start to enjoy getting post again.

-Rd
 
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Hi,

From the detail provided, I would support a lot of what has been said about going to meet your lenders & explaining the situation asap.

I would further suggest that you consider disposing of one of the two cars - remember, these cars cost a lot of money to run, aside from the loan repayments (ie fuel, road tax, insurance, repair, parking etc).

Sadly, as you are going to be out of work for a little while, you should be able to manage with only one car (I assume, between yourself and your partner :) )

By disposing of one car you reduce:
- your debt, by the sale price of the car
- your outgoings, by various costs associated with running that car.

Regards

G>
 
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