Negotiating with a creditor
Contact the creditor at once and negotiate a new payment schedule, for example by setting a later due date.
- Let the creditor know if there has been a change in your life situation, for example a chronic disease, birth of a child, divorce, unemployment or a similar reason that is connected to your financial difficulties.
Ask for a more long-term payment plan.
The possibilities for payment arrangements include:
- smaller monthly payments and or a longer loan period
- agreeing on repayment-free periods during which you can make smaller and more urgent payments
- loan consolidation, which makes it possible to lengthen the repayment time and reduces your costs
- lowering the interest or overdue interest rate.
You can ask for a new payment plan for a few months or longer.
You should always aim for a payment plan that you will be able to comply with. The creditors will be less willing to change the payment plan if you cannot keep to the original plan without an acceptable reason.
If you know that you will not be able to pay a debt, to avoid unnecessary recovery costs you have the right to ask the creditor to suspend voluntary collection and start legal collection. You should note that you will have a payment default entry in your credit history when the District Court has issued a verdict in which it orders you to pay the debt.
Costs of payment arrangements
When the payment period of an overdue debt is lengthened at your request, for example by postponing the due date, the creditor or the collection agency may charge you at most EUR 5 as recovery costs.
If you make a payment plan with the creditor or debt collection agency for the entire remaining amount of debt, you may be charged as recovery costs
- at most EUR 20 if the principal amount is no more than EUR 100, or if the payment plan consists of at most four instalments or if the debt is directly enforceable.
- at most EUR 30 if the principal amount is more than EUR 100 but at most EUR 1,000 and the payment plan consists of more than four instalments
- at most EUR 50 if the principal amount is more than EUR 1,000 and the payment plan consists of more than four instalments.
Costs can normally be charged for at most two payment plans. If your debt is directly enforceable or the principal amount is less than EUR 100, only one chargeable payment plan can be made.
Sometimes it is possible and reasonable to combine several debts into a single new loan. If you cannot manage the repayments of several smaller debts at the same time, the solution may be debt consolidation, or a restructuring loan. For example, you can use a single bank loan or consumer credit from a finance company to pay off your debts with a lump sum payment to your creditors.
However, you should first find out about the costs and repayment period of the restructuring loan and and compare whether it would be cheaper for you than seperate individual debts.
If you do not have collateral or a guarantee needed to obtain a restructuring loan from a bank, a guarantee from the Guarantee Foundation (Takuusäätiö) or social lending offered by some municipalities could be the solution for you.
Obtaining a restructuring loan from a bank may be difficult, especially if you have payment default entries in your credit history or you do not have collateral. Under certain conditions, the Guarantee Foundation gives grants guarantees for a restructuring loan from a bank to private individuals who have payment difficulties. You can get a guarantee and a loan even if you have a bad credit record.
The advice provided by the Guarantee Foundation is free of charge.
To read more about the Guarantee Foundation’s restructuring loans, visit www.takuusaatio.fi (in Finnish).
Some municipalities offer social loans so that you can, for example, make the necessary purchases for the home or balance your finances.
A social loan may be granted for a justified reason to a person who, because of their low income and poverty, cannot access credit on reasonable terms and who is able to manage the repayments.
You can find out about the availability of social loans in your municipality by contacting the municipality’s social services or the legal aid offices’ financial and debt counselling services.
Read more about social lending on your municipality’s website.
Applying for debt adjustment
If you cannot manage your debts, the last resort is to apply for statutory debt adjustment for private individuals. However, you must first try all other ways of arranging or paying your debts.
You can contact the legal aid offices’ Financial and debt counselling services to find out about the possibility of debt adjustment. The financial and debt counsellors can help and advise you at all stages of the process and during the payment plan.
For more information, visit the website of Financial and debt counselling.
You have the right to receive information about your debts
You have the right to ask the creditor to give you free of charge up-to-date information about the total amount of your debts and their grounds. You have the right to ask the creditor once a year for an itemisation of your unpaid debts and their instalments free of charge, as well as a report on how the interests and charges are calculated.
The creditor must give this information to you within a reasonable time.
It is important in all payment arrangements that your debts and liabilities are taken into account comprehensively.
If necessary, financial and debt counsellors can help you to determine your overall financial situation.