Despite the fact that payday loans and other online loans are no longer considered usury, the debt problem is still extremely serious. It is estimated that up to 35% of people in the 30-39 age group have a problem with timely repayment of financial obligations.
Of course, not all debts relate to loans, but the availability of this type of products means that their percentage share in debt is growing. The problem is compounded by the fact that people who have low incomes, rarely exceeding USD 2,000 net, and therefore experiencing major problems with loan repayment and more prone to falling into a spiral of debt fall into debt.
What is a loan limitation period?
In other words, the debtor is released from the obligation to pay the obligation after a certain repayment deadline. Limitation is a legal term, strictly regulated by the Civil Code and at present, pursuant to art. 118 of the Code, it may be 10 or 3 years, depending on the type of service provided. The second case concerns “claims for periodic benefits” included in the provision, i.e. when the money is borrowed for a specific period of time and the date when the money is given is known.
Therefore, non-bank companies, but also banks being creditors of the borrower must take into account a limitation period of 3 years. This is the period that begins to count from the time when the loan should be repaid.
This is different for installment loans, where the limitation period applies to each installment separately and is calculated from the moment when each installment should be paid. It is true that in January 2018 a draft amendment to the Civil Code was adopted, which provides, inter alia, reducing the limitation period for claims, but specific issues regarding entities such as loan companies will not change.
Prescription and consequences of non-repayment on time
The three years indicated are a short period during which the borrower could theoretically achieve the repayment of the loan until he was released from the obligation to settle the debt. In practice, however, this is not so simple, and the matter of limitation is more complicated. This procedure applies only to cases where during these 3 years the creditor does not take any action to enforce the debt. What does it look like in the case of loan companies?
Debt collection procedure begins relatively quickly. The reprimanding process, i.e. monitoring and admonishing the overdue borrower may take several months, but these are active and registered activities, even if the borrower does not respond to these prompts. In addition, the debt is transferred to the debt collection company quite quickly and, although its activities may be different – more or less ethical – their idea is to agree amicably with the client and individually resolve the embarrassing situation.
The limitation period also breaks every step of the debtor. In practice, it will be the borrower’s contact with a loan company, response to a prompt, consent to individual debt repayment, participation in mediation or meeting with a debt collector.
Even if the limitation period finally ends, information on the debt will still appear in the BIK. A negative entry in such a database will quite effectively hinder your life, not only when you have to apply for a loan. Problems can also arise with taking a payday loan as proof.
How to avoid negative consequences of repayment?
The most important issue here is responsible lending, which means lending amounts adequate to your financial standing and carefully analyzing your repayment plan. You should also consider the option of extending the repayment period and use this option if it is available in the offer of the selected loan company or try to get a consolidation loan to pay off loans.
Another important issue is to read the contract carefully and carefully read the table of fees and commissions due to the loan company. These, according to the law, must be public, and the client must be familiarized with the full loan costs.