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Payment difficulties

In case of the customer struggling with loan payments, Swedbank and Swedbank Līzings offers the following solutions:

  • Postponement of principal repayments or grace period
  • Extension of the term of agreement
  • Combining smaller loans into one bigger loan
  • Other solutions on a case-by-case basis

In case of unexpected financial difficulties, one possible solution is a grace period meaning the option to postpone principal payments for a certain period of time, while continuing to pay only interest payments. This is an appropriate solution if the income of the borrower or their family has temporarily decreased. The grace period is usually granted for a period up to 12 months depending on the type of product (up to 3 months for car leasing, up to 6 months for consumer financing products, up to 12 months for mortgage loans) and on the borrower’s financial situation.

Things to consider:

  • After the grace period, the monthly payment will increase proportionally, as the postponed amount will be spread over the remaining term of the agreement.
  • Customers are urged to apply in due time, before they miss a repayment deadline.
  • The grace period option can usually not be used several times in a row.
  • Customers who have insurance against borrower’s unemployment or incapacity for work, in case of losing their job, are urged to claim the insurance benefit here.

Important! As of 1 October 2020, the rules of the moratorium elaborated by the Finance Latvia Association for customers suffering from short-term financial difficulties due to Covid‑19, are no longer in force. If you still have difficulty to meet your loan payments, Swedbank will continue to help you find the most appropriate solution to overcome these difficulties through standard procedure. Guidance on how to apply is provided here.

If your situation has improved, you may stop the grace period requested during the moratorium and resume your principal payments before the end of your grace period. To do so, submit an application in free form via Internet Banking — choose the topic “Loans” and indicate the month in which you would like to resume the principal payments for your loan(s).

Please be informed that the relevant amendments to your agreement will have to be signed at a branch office or remotely using a qualified electronic signature.

Extension of the agreement term or repayment period can help if the borrower’s income has dropped on a permanent basis, for example, if the salary has been cut or a family member has lost their job. Extension of agreement term means that the monthly payment will decrease, whereas the loan repayment period will be prolonged.

Often, extension of the agreement term does not lead to the desired effect if the amount of obligations is large and the loan repayment period has been rather long to begin with. In such an event, the reduction in monthly payment is minor. In any event, we can look into each individual situation together.

Please contact the bank to find a solution together.

Combining smaller loans into one bigger loan may also help in situations where the borrower’s income has dropped, for example, the salary has been cut or job has been lost, and maintaining current payments is challenging. Consolidating several loans into a single one and drawing up a longer repayment schedule will reduce the existing monthly payment and the loan obligations are discharged gradually.

Please contact the bank to find a solution together.

Use of these solutions entails amendments to be made to your contract, as a result of which a restructuring status maybe applied to your loan, which may be taken into account in the assessment of any future lending to you.

You can apply for any Swedbank payment difficulty solution by following the procedure described below according to the product used. If you are applying for a payment difficulty solution regarding a loan that involves a guarantor or co-borrower, ask them to fill in a guarantor’s or co-borrower’s application via Internet Banking.

If you currently have a grace period which is about to expire, but you still struggle with payments, please use this same application procedure – we will try to find the most appropriate solution for your situation.

  • Mortgage loan — in section “Mortgage loan” choose “Fill in application”, specify “Changes in loan agreement in case of payment difficulties” in the field “Loan purpose”, and fill in the rest of the application fields.
  • Consumer financing products — go to “My obligations” and select “Changes” > “Other changes” next to the respective loan or, alternatively, fill in the loan application and describe the situation in the section “Additional information”.
  • Leasing — send the bank a message via Internet Banking.
  • Mortgage loan — in section “Mortgage loan” choose “Apply as a co-borrower”, specify “Changes in loan agreement in case of payment difficulties” in the field “Loan purpose”, and fill in the rest of the application fields.
  • Consumer financing products — in any consumer financing section choose “Apply as a co-borrower” and fill in the application fields.
  • Leasing — under section “Car leasing” choose “Guarantor’s application” and fill in the application fields.

If meeting existing loan obligations is expected to be out of reach in the long-run, switching the home or car could be a workable solution. Moving to a smaller apartment or switching from an expensive car to a more economical one will allow saving on payments for the apartment and fuel.

Money saved as a result of such a switch can be applied towards paying off a loan. This solution will also allow reducing monthly loan payments. We’d like to remind that the bank’s consent is mandatory for such deals, hence we suggest first consulting the bank’s specialists. Please note that finding a suitable solution for property switch may be time-consuming which means that you might have to be flexible and adapt to the circumstances.

If a lasting decline in income is expected, one of the solutions is selling the loan collateral (real estate or vehicle) as a way of avoiding the potential financial difficulties. We recommend starting the process of selling as soon as possible as in that case you’ll have more time and might fetch a better price. Consulting the bank before selling the property is a must.

Sometimes it is enough to sell one’s belongings to overcome temporary issues. By putting up an ad on the web or in paper you can sell household appliances or furniture and the money obtained will help you survive the difficult stretch. Take into account: selling items bought on hire purchase requires consent by the seller or the financing institution.

When all other options have been exhausted, an enforcement officer is engaged and asked to sell the property owned by the borrower. Such a solution is mainly applied in cases when the borrower or the lessor is not interested in resolving their situation and avoids communication with the bank: does not answer calls, regularly changes their phone number and place of residence, or has fled the country altogether.

In such cases, the Bank is forced to exercise its legal right as the creditor and unilaterally withdraw from the agreement, demanding early performance of obligations. The enforcement officer auctions the property as a result of which its price may be lower than the market price. Additionally, the debtor will also have to cover the law enforcement officer’s expenses which are roughly 10% of the outstanding obligations. To avoid such a scenario, we recommend contacting the bank immediately when problems with loan payments arise, that way looking for the most appropriate solution to the situation at hand together.

Pre-crisis loans are home loans which were issued prior to 31 December 2008 and were not repaid due to the economic downturn of 2008. The property mortgaged as collateral for these loans has been sold, however, this sale has not covered the outstanding commitment in full.

For several years already Swedbank has been offering customers a Social Settlement Programme, under which various solutions are sought to settle commitments.

On 4 August 2020 amendments to the Credit Institution Law took effect giving creditors the right to unilaterally write off pre-crisis loan commitments in full or in part for natural persons until 31 December 2022. The intention of the legislature is to thus return to economic circulation a part of the society, which, having failed to repay their debts, has been forced to live in the shadow economy or leave the country.

Eligibility - Paragraph 88 of the Transitional Provisions of the Credit Institution Law provides several criteria for identification of such agreements:

  1. Loan agreement concluded with a natural person.
  2. The natural person (the borrower) is not and has not been a person related to a company as defined in the Law on Taxes and Duties.
  3. The commitments arise from a loan agreement, which was concluded and took effect prior to 31 December 2008.
  4. The repayment of the commitments was guaranteed by collateral — a mortgaged real estate property.
  5. The debtor or pledgor has lost ownership of the mortgaged real estate property due to the loan commitments to the creditor (the collateral has already been sold, but an outstanding amount still remains) prior to 31 December 2018.
  6. On the date of writing off the loan, it is booked on the creditor’s accounts as a written-off asset.
  7. An insolvency procedure has not been started for the relevant natural person.
Commitments shall not be written off - for borrowers who have an ongoing insolvency procedure.

Writing-off/writing-down of commitments - Swedbank has identified all customers who meet the criteria listed under Paragraph 88 of the Transitional Provisions of the Credit Institution Law. For the majority of pre-crisis loans, the outstanding principal amount shall be reduced by 90%, thus allowing customers to fulfil their remaining commitments in full in the foreseeable future. However, for some customers, 100% of their commitment shall be written off.

  1. Socially vulnerable groups*:

    • large families taking care of at least three children;
    • persons who have been granted the status of a low-income or indigent person;
    • persons falling into other socially vulnerable groups.

    *A certification of belonging to one of the aforementioned social groups must be submitted to the bank by 1 July 2022.

  2. Persons who will have reached pension age by 31 December 2022 as defined under Section 11(1) and Paragraph 8.1 of the Transitional Provisions of the Law on State Pensions.
  3. Borrowers who have made a Social Settlement with the bank in the form of a consumer loan. With the exception of specific settlement cases.
  4. Applicable to cases where the borrower is deceased.

Applicable to cases where the customer has defaulted on their commitment due to the economic downturn and has not found a different solution for settling the commitment.

  1. Cases where there are ongoing legal proceedings.
  2. Cases where there is a settlement in place.
  3. For customers who have acted in bad faith during the recovery process.

Important note!

Persons, who belong to a socially vulnerable group must fill out and submit to the bank a questionnaire along with supporting documentation demonstrating their compliance with any of the aforementioned criteria by 1 July 2022. Documents may be submitted to any Swedbank branch, by mail to the Swedbank Extrajudicial Restructuring Unit (Balasta dambis 15, Riga, LV-1048) or by e-mail to izligums@swedbank.lv (signed with a secure digital signature).

Persons whose commitments will be written off partially will receive a letter at their registered address of residence stating the timeframe and procedure of repaying the remaining commitment.

Additional information

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