Consequences of failure to repay loan

It is important for Swedbank to support honest but struggling borrowers. Here you will find information about the consequences you will face in case of failure to maintain your loan payments. Also, we will provide some of the most vivid examples of dishonest borrowers.

The borrower should be aware of what are the consequences if a loan is defaulted, no solution is being sought, or the customer is not willing to cooperate with the bank (the client, in the knowledge that problems may arise with loan repayment, is not coming to the bank, is not answering the bank’s calls, letters, bank messages or text messages encouraging the client to approach for help).

The consequences are equally serious – be it mortgage loan, car lease, consumer credit, credit card, line of credit or hire purchase.

Consequences in case of mortgage loan:

• A court bailiff sells the mortgaged property.
• The property is repossessed and auctioned. However, if it is sold for less than what is required to discharge the outstanding loan balance, the difference will still be considered a debt.
• A debt repayment schedule will be drawn up for monthly payments for any remaining part of the loan. If these payments are defaulted, late interest will continue to accrue.
• The court bailiff may enforce collection against the debtor’s or guarantor’s movable and immovable property or other income. The court bailiff has the authority to make the debtor’s employer withhold money from the debtor’s monthly pay and to transfer it to the court bailiff until discharge of the amount of debt in full.
• The court bailiff has the authority to distrain (attach) any assets owned by the debtor and to freeze any accounts with Latvian banks until discharge of the debt obligations. Should any other asset come into the ownership of the debtor or the guarantor, it may be confiscated.
• All expenses related to court bailiff services are borne by the debtor.

Consequences in case of car lease:

• The car is repossessed and sold at a price determined according to the market value and demand.
• If the car is sold at an amount, which does not cover the entire outstanding lease or loan amount, or the lender has incurred any loss, the difference will still be treated as a debt, and failure to pay it will result in late interest being charged on that difference.
• A debt repayment schedule will be drawn up for monthly payments for any remaining part of the loan. If these payments are defaulted, late interest will continue to accrue.
• The court bailiff may enforce collection against the debtor’s or guarantor’s movable and immovable property or other income. The court bailiff has the authority to make the debtor’s employer withhold money from the debtor’s monthly pay and to transfer it to the court bailiff until discharge of the amount of debt in full.
• All expenses related to court bailiff services are borne by the debtor.

For an example of dishonest practices by a car lessee, click here.

Consequences in case of short-term lending products:

• The debt case is handed over to a collection agency and collection is enforced against both the debtor and the guarantor.
• If the collection process does not lead to repayment of the debt, the claim is lodged with court. To fulfil the court’s judgement, the case is handed over to a court bailiff.
• The court bailiff then enforces collection against the debtor’s and/or guarantor’s movable and immovable property or other income. The court bailiff makes the debtor’s employer withhold money from the debtor’s monthly pay and to transfer it to the court bailiff until discharge of the amount of debt in full.
• The court bailiff distrains (attaches) any assets owned by the debtor and freezes any accounts with Latvian banks until discharge of the debt obligations. If the customer has a number of loan (short-term and long-term) agreements with the bank, then collection may also be enforced against the mortgaged or pledged property for falling overdue with short-term loan payments.
• All expenses related to court bailiff services are borne by the debtor.
• Defaulting on loan obligations may result in not being able, or being less able, to borrow again in the future from Swedbank and other credit institutions.