Welcome Today we’ll be discussing On What to do After Having Too Many Debts with Online Loan Apps and Couldn’t Pay Back.
The emergence of instant online loan apps in Nigeria has provided easy access to quick funds for many people. However, excessive borrowing without the capacity to repay on time can trap borrowers in debt spirals.
If you have accumulated multiple online loans and are unable to pay back due to reasons like job loss, business failure etc, it can be an overwhelming situation. But with the right steps, you can take control and handle the debts systematically to resolve the problem.
This comprehensive guide covers constructive strategies on what to do if you have unpaid loans from many lending apps. We also share tips to prevent recurrence, legal options and answers to frequently asked questions.
Assess the Current Debt Situation
The first step is to objectively assess the current scope of your debts:
– Make a list of all active loans and lending apps involved
– Note down principal loan amounts and interest rates
– Calculate total outstanding loan amounts
– Understand repayment terms and schedule
– Identify loans that are under default
– Review payment reminders or notices from lenders
This helps visualize the total debts owed and formulate further plans accordingly.
Communicate Proactively with Lenders
Be proactive in communicating with the lending companies:
– Explain your repayment difficulties and intent to repay
– Ask lenders for account statements
– Request waiver of late fees if reasonable
– Discuss any options to restructure installments
– Explain your plan and time needed to clear debts
– Update lenders on material changes in situation
– Maintain proper documentation of communication
Transparent communication and cooperation can help manage lender expectations.
Prioritize and Pay Off Highest Interest Debts First
With limited funds, focus on clearing loans with the highest interest rates:
– Structure a payment plan as per priority
– Allocate income rationally to start repayments
– Pay off highest rate debts first
– Gradually move down the interest rate ladder
– Take help from family if required and affordable
– Liquidate any assets or investments if required
This method minimizes overall interest costs on current loans.
Cut Down Additional Expenses and Avoid New Debts
To have surplus funds for repayment, reduce unnecessary expenditure:
– Minimize lifestyle and entertainment costs
– Reassess subscription plans and memberships
– Defer any major personal purchases
– Avoid taking new loans until existing debts are cleared
– Seek additional income through side jobs if possible
– Stick to a frugal budget tracking every expense
Curtailing spending is vital to creating debt repayment capacity.
Consider Debt Consolidation
Debt consolidation combines multiple debts into one through different methods:
– Take a personal loan to pay off all debts
– Consider balance transfer to a lower interest credit card
– Approach banks for a top-up home loan
– Debt management programs by financial advisors
– Debt consolidation loans offered by some lenders
– Non-profit debt counseling agencies like CCS
This simplifies repayment with one EMIs at lower interest.
Explore Debt Restructuring and Settlements
One can negotiate mutually beneficial solutions with lenders:
– Request lenders to restructure repayment schedule
– See if lenders can agree to a settlement on principal/interest
– Offer lump sum part payments to close loans
– Evaluate options like debt-for-equity swaps
Restructuring and settlements provide legal debt relief options.
Consider Selling Assets or Collections
Monetizing assets can generate funds:
– Sell property, car, valuables or investments
– Liquidate equity shares or mutual funds
– Auction collectibles, artworks or vintage items
– Have a garage sale for unused household items
However, consider tax and legal implications before liquidating assets.
Leverage Debt Management Apps and Tools
Specialized apps and tools simplify debt management:
– Use expense trackers like Spendee to budget better
– Try apps like Credit Karma, CRED that monitor credit score
– Online tools like DebtSnowball help strategize repayment
– Build an emergency corpus with digital savings tools
– Seek help from financial advisors or consultants
Technology can facilitate the debt freedom journey.
FAQs About What to do After Having Too Many Debts with Online Loan Apps and Couldn’t Pay Back
Here are some common questions answered about dealing with unpaid debts from online lending apps:
1. What happens if unable to repay an online loan in Nigeria?
The lender may start following up for recovery, levy late fees, report default to credit bureaus, or explore legal debt recovery options as a last resort.
2. What can loan apps do if you don’t pay in Nigeria?
Most apps will follow an escalation process like calls, messages, emails, late fees, engagement with guarantors etc. before considering legal action for outstanding dues.
3. Is it possible to negotiate with online loan apps in Nigeria?
Yes, most lenders are willing to negotiate repayment terms, waive fees, restructure EMIs or provide settlements mutually beneficial to both parties.
4. What are the risks of not paying back loans taken from apps?
It can lead to legal action, damaged credit rating, bad debt tag, difficulties availing credit, collection harassment, and stress.
5. How can I remove bad debt record from loan app defaults?
You can request credit bureaus to remove if wrong data. Alternatively, repaying dues and rebuilding credit score over time reduces bad debt impact.
6. What is the total debt limit on loan apps in Nigeria?
Limits depend on the platform, user details and credit standards. But having >5 active loans could signal excessive debt requiring correction.
7. Can I be arrested for not paying online loans in Nigeria?
Extreme legal actions like arrests for civil defaults are rare except for criminal frauds. Lenders mainly use lawful recovery methods.
8. What can lenders legally do to recover unpaid online loans?
Debt collection calls, notices, late fees, using guarantors, civil suits, reporting defaulters to credit bureaus etc. done lawfully.
9. Can I get counselling for multiple online loan debts?
Yes, non-profit counselling from Credit Counselling Society (CCS) in Nigeria can help through advice, education and debt management plans.
10. What is the difference between debt consolidation and restructuring?
Debt consolidation combines all loans into one by taking a new loan. Restructuring means changing the existing repayment structure of current loans.
11. How do I prioritize debt repayment with low income?
Focus on paying minimum due on all loans, then put any extra funds towards loan with the highest interest rate first until paid off.
12. When should debt settlement be considered as an option?
If unable to repay full loan amounts, have negotiating skills and get written settlement offer from lender specifying waived amounts.
13. Can I get a personal loan to repay online debts?
Yes, banks offer personal loans but require strong credit profile and income proof. High-interest alternatives like payday loans also available.
14. Should I take more online loans to repay existing ones?
Avoid taking new loans to repay old ones as it can worsen the debt situation leading to a vicious cycle of unmanageable debts.
15. What are signs of being trapped in a debt spiral?
Inability to pay current debts, rising late fees, taking new loans for repayments, using up savings, lying about debts, stress, depression, reckless borrowing.
16. How can I avoid getting into online debt traps?
Only borrow what you can repay, read terms, build savings, track expenses, don’t take excessive loans, monitor credit rating, spend prudently and use credit cards wisely.
17. What are the first steps after getting debt trap?
The first steps are remaining calm, making a debt repayment plan, reducing expenses, communicating with lenders, avoiding new loans and seeking professional help if required.
18. How can I manage my finances to avoid future debt traps?
Prepare a budget, track spending, clear credit card dues monthly, build emergency funds, understand loan terms thoroughly and invest surplus smartly.
19. What smart goals should I set after repaying online loan debts?
Goals like building savings, improving credit rating, using credit cards responsibly, creating passive income sources, having adequate insurance, and controlling lifestyle inflation.
20. What lessons can be learnt from online loan default experience?
Importance of emergency funds, controlling debt, reading contracts carefully, financial planning, sticking to budgets, and not taking unaffordable loans just because they are easily available.
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Conclusion
While excessive online lending debts can be stressful, following a step-by-step approach of communicating with lenders, reducing expenses, repaying high-interest debts first, exploring consolidation and settlement options will help resolve the situation in a structured manner. The key is to learn from the experience, take corrective actions and make mindset shifts to avoid similar issues in the future through healthy money management.
After reading this article now you know What to do After Having Too Many Debts with Online Loan Apps and Couldn’t Pay Back.
