Memories of overdue debts do not evoke positive emotions: perpetually calling creditors, problems with money, a constant rush, and attempts to re-borrow the necessary amount. Many try to correct the situation by taking a new loan at another institution, but it only aggravates the problem: you will have to pay off not one but two or more creditors. What to do? Today there are legitimate and quite realistic ways to write off debts, whether an overdue fine, a utility bill, or a loan from the bank. We looked into how debts can be canceled legally.
Types of debt forgiveness
Please note that an essential point in solving the issue of how credit debts are written off is that the court plays a unique role, which may not rule in favor of the debtor. In this case, writing off a loan debt can drag on for an extended period. The loan can be written off:
- Insurance. When signing a contract, the borrower often takes out an insurance policy. That protects his or her life, health, or disability property pledged as collateral, such as an apartment or car. The insurance covers the borrower’s debts in full.
- Declaring bankruptcy. If the borrower has no movable or immovable property and no capital or savings, he or she can go to court to initiate bankruptcy proceedings and have the debts forgiven.
- Incapacity or disability. People who have been injured or disabled due to losing the ability to earn may also qualify for an annulment of debt.
- Expiration of the statute of limitations. If a citizen fails to pay a loan for more than three years, such a debt can be legally written off upon expiration of the statute of limitations.
Often, especially when large sums of money are involved, lenders require borrowers to take out an insurance policy on their life or health or the property they buy. Payments under such insurance will not be cheap, but in case of force majeure, the procedure can save you from a lot of problems.
Please note that such insured events are specified in the contract. It is critical that what happened to you falls under the criteria of an insured event.
Insurance companies sometimes refuse to pay their bills. If this happens to you, you can go to court. Free legal aid centers can help you prepare a claim.
Liquidation of debt upon expiration of the statute of limitations
The general limitation period is three years. This is when a person or organization can go to court to protect their rights.
Debts, interest, and penalties for which no payments have been made for three years or more will be subject to write-off upon expiration of the statute of limitations. That is, it will only be possible to cancel debts for which you, and this is important, do not pay a penny for three years. You will have to go to court again for this.
It is also essential that you do not sign documents about the extension of the limitation period or the impossibility of writing off the debt at the end of the limitation period. Otherwise, such an agreement signed by you personally will completely nullify the possibility of writing off the debt in this way.