Today, the credit industry is actively due to mass demand. Registering a transaction does not take long and you need a minimum amount of documents. But banking terminology is not known to everyone, so many people do not know what credit debt is. The concept is used in the presence of credit debt. Lack of debt confirms the responsibility of customers who are offered more advantageous services in the future.
Definition
Credit debt is the amount of funds provided to the borrower by the Bank under a loan agreement whose conditions have not been met. Debt arises in the case of late payments. The amount will be reduced when the money is returned to the bank.
Net credit debt is the amount provided to the borrower without interest, commissions, fines, fines. All this is confirmed by the contract. Net loan receivables are receivables that do not arise from the fault of the financial institution but from outside circumstances.
Types of debt
There are two types of debt:
- when the repayment period has not yet occurred;
- overdue
It is also classified as:
- expected
- doubtful;
- hopeless.
Although a credit debt has been incurred, it provides the client with the possibility to repay the debt. To this end, the Bank offers restructuring, repayment or deferral.
Dates and forms
There are three forms of payment-based debt:
- current: interest payment is delayed for 5 days, for 6 days, up to 1 month, more than 6 months, or no delay;
- reissue: reissue is done without changing the terms of the contract or their entry in the original document;
- Maturity: includes a delay on the main debt of up to 5 days, from 6 to 30 days, from 31 to 180 days, for 180 days.
How does it come into being?
The deterioration of clients’ solvency is affected by many factors. Even with a positive outlook, there are circumstances that make it impossible to repay the loan.
If you have borrowed money and have not been returned, this is considered a debt. This may be due to job loss, lower wages, illness. There are many reasons, but in any case the debt must be recovered.
Banking risks
The work of banks is associated with various funds risk. They are operational, market, credit. A major threat to the institution’s activities is the non-return of funds provided to customers. The common reason is an illiterate policy in this area.
That is why banks check their clients’ payments for loans and borrowings. The bank’s cooperation with the client depends on the liability and repayment of the debt. The amount of the credit debt must be repaid on time.
Debt relief
Banks do not want to risk that customers will not be able to pay their debt. Therefore, all risks are minimized. As it is impossible to fully protect themselves from the insolvency of customers, they have a reserve of credit debt generated from interest on other loans.
Banks rarely write off debts, usually in the following cases:
- small amount of debt;
- the death of a debtor who has no heir;
- after bankruptcy.
Information on debts in the bank is 5 years and this time is monitoring the solvency of the debtor. If the client has income, the creditor asks to repay the debt. Debtors should not skip payments or refuse to pay because the law protects the lender more. Should the money be borrowed, it will continue to recover from the borrower.
It turns out that credit debt does not include interest. The modern banking system works smoothly, so lenders know how to reduce the risk of non-refundable money. This should be considered as every borrower when you make a loan.
Debt repayment
The contract specifies the method of repayment of the credit debt. The resources can be carried out:
- equal payments: they include principal and interest;
- Differential payments: interest on balance.
When selecting a recovery order, the full amount must be considered. A convenient option can be calculated using a calculator. After the repayment date has been set, the Bank has no possibility to change any conditions. The payment scheme is updated with debt restructuring.
Debt repayment account
When registering a loan, the bank opens a loan account through which various methods of loan repayment are performed. Its presence is essential for:
- making payments in cashless form;
- receiving account statements;
- binding to the current account.
There are no commissions to your account. There are several forms of account whose type is determined by the contract and the category of the debtor. After repayment of the loan should be confirmation that there is no debt. Sometimes your account cannot be closed due to unpaid additional services, which negatively affects your credit history.
If you make payments through a cashier bank, additional charges may apply. But then the money is credited in time. Not all banks have evening and weekend cash registers. It is convenient to transfer money via ATM. Now there are other ways of replenishing: electronic systems, terminals, bank cards.
The timely repayment of the loan makes the client dear at the bank. He will be offered a lucrative offer with low interest rates and flexible terms. Debt repayment allows you to prevent many unpleasant events in your life.