Breach of Agreement: What Happens When I Don’t Pay a Renegotiated Debt?
Although this is not a recommended practice, late debt repayment and renegotiation is more common than previously thought. However, this action can have consequences as harmful as being in debt.
A breach of agreement will require a double effort from the debtor to comply with what has been renegotiated. So, to avoid this kind of problem, there are some actions that defaulting people need to take.
What is debt settlement breach?
Breaking a renegotiated debt agreement causes the debtor to lose the advantages of renegotiation, making it even more complicated to pay the outstanding debt. Debt settlement without entering a breach of agreement is possible. But when it is not done and the breach of agreement occurs, the lender may summarize the terms of the contract prior to the renegotiation.
Additionally, breaking the agreement may lead to the following issues:
- The debtor may have the name reinserted in the delinquent register;
- The debtor may lose the negotiation with interest rebates and fines;
- The debtor may face difficulties in getting another renegotiation with better conditions.
That is, not repaying debt with payment agreement can cause problems by debtor, because the lender may lead you to default for future negotiations.
In addition, because the debt settlement breach has occurred, there is a belief that the new renegotiation is not fulfilled either.
6 Tips for Paying Debts on Time
To avoid breaking a deal and having to face major debt renegotiation issues, the debtor may take some action. Some of them are:
1. Financial Planning
When assuming repayment of arrears, you need to have planning. From the date stipulated on the new contract it will be necessary to disburse an amount referring to the settlement of the debt.
That is, there needs to be financial organization so that the debtor is able to assume that debt without being in a situation where the economic welfare is impaired.
2. Negotiate the debt
The debt negotiation proposal is not exclusive to the lender. The debtor may also suggest a renegotiation to pay the outstanding debt. However, care must be taken to assume only what you can afford.
3. Budgetable installments
Before renegotiating the debt, the debtor needs to make a mapping of his expenses to know if the offered installments fit the budget. This way, the debtor can assume the payment of the debt with peace of mind.
4. Lower interest loan
In some cases where there is no renegotiation without interest and penalties, it may be more feasible for the borrower to acquire a loan with lower interest rates. This way, the total amount paid will be less than the initial debt.
But you need to be aware before you apply for a loan, the installments and the payment date must also be within budget and repayable. Otherwise, it becomes just one more default.
5. Don’t forget due dates
The lender may understand the delay of the due date as the breach of contract. Therefore, the debtor needs to be aware of the deadlines for repayment of the debt. Otherwise, you may face new terms for debt settlement.
6. Do not take on new debt
In order not to face a new breach of agreement now or in the future before, during and after the debt settlement process, it is best not to contract new debts. This avoids that even the problem has any reason to exist and is much better for people’s financial education. Check out more tips like this in our WhatsApp newsletter!
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