The borrower in the COVID19

The current pandemic is hitting the Polish economy first and foremost. Due to the crisis, the value of the Polish currency has significantly decreased, and the exchange rate of the Swiss franc and many other currencies is rising. Many of us do not earn at all, or achieve incomes incomparably lower than those from before the epidemic was announced. Many borrowers cannot afford to pay off loan installments. So what do we know about credit and coronavirus? In response to this difficult situation, the banks offered “Credit holidays”, and the National Bank of Poland lowered interest rates, help borrowers in PLN. No special form of assistance is provided for “frankers”.

Loans in francs – The key judgment of the TSUE

3 October 2019 r. The Court of Justice of the European Union ruled in favor of people who took out loans in Swiss francs. The case concerned borrowers who concluded a loan agreement indexed to a foreign currency – the Swiss franc. On the basis of this judgment, issued in connection with the request for a preliminary ruling, the District Court in Warsaw on the interpretation of Council Directive 93/13/EWG of 5 April 1993. in the matter of unfair terms in consumer contracts, many “frankers” decided to go to court, requesting the cancellation of concluded loan agreements, or a judicial modification of the content of these agreements.

Should we go to court or wait out the pandemic?

If, as “frankers”, you have been considering taking steps to bring an action against the bank, for example, for the cancellation of a concluded loan agreement, I encourage you to take these steps as soon as possible. Credit and coronavirus – courts in Poland work to a very limited extent, and most of the time limits have been suspended, however, it is a good time to consult your case calmly with an attorney or legal advisor, and if there are sufficient premises – prepare and file a suit well in court. It is worth knowing that in each such case, we can demand – as security for the action – suspension of the repayment of further loan installments until a final court judgment, which will result in no need to pay the loan installments, without negative consequences resulting from the lack of timely payment. Admittedly, if we lose the case before the court, we will have to pay off the arrears, but we can hope that the economic situation in the world and our financial possibilities will improve by then.

credit and coronavirus

Credit and coronavirus – “Credit holidays”

The Polish Bank Association recommended postponing the repayment of loan installments for at least 3 months. The banks adopted this recommendation, individually regulating the issue of deferral. “Credit holidays” applies to natural persons who took out a consumer or mortgage loan and entrepreneurs who took out loans for companies. A request for deferment can be made online. Banks on their websites provide ready-made forms and offer any assistance in filling them out. When considering the applications, the borrower’s difficult financial situation due to the pandemic is taken into account. In most cases, however, there is no need to document financial problems in any way – a short justification or statement of the borrower is enough for the application to be approved. Deferring loan repayment, although it will undoubtedly ease the home (company) budget, also has negative consequences, from the borrower’s point of view. The loan period will be extended and the loan costs will increase, because during the period of suspension of repayment, interest will continue to be charged. Banks offer borrowers to add the amount of capitalized interest to the loan – which will consequently increase the amount of the loan to be repaid and will result in an increase in interest installments, or the repayment of capitalized interest in full together with the first installment falling after the expiry of the loan repayment suspension period, then our one-time installment will be higher by the amount of interest due for this period, but the remaining installments will remain unchanged. The choice between possibilities is not clear-cut and depends each time on the individual situation of the client. If we have doubts – it is worth consulting an attorney or legal advisor.

Many banks offer suspension of the entire loan installment, but there are banks that offer suspension of only part of the installment – the so-called capital installment, this means that we have to pay attention to the repayment of the loan in terms of payment, but only in terms of interest. Despite the positive decision of the bank, it is worth making sure on what terms the suspension in repayment of the loan was granted to us.

Can I stop paying off the loan myself or do I have to contact the bank?

Willful cessation of paying liabilities to banks is associated with many negative consequences. First of all, any arrears in loan repayment negatively affect our creditworthiness and in the future we may have problems obtaining financial support. The bank also charges penalty interest on overdue liabilities – much higher than the interest due on the loan taken, it may also charge additional fees for debt collection activities – reminders, requests for payment, etc., which consequently increases our financial burden towards the bank. The bank has the right to use the established collateral and terminate the contract, which requires immediate repayment of the entire loan, including interest and other loan costs. In the absence of voluntary payment, the bank will refer the case for payment to the court, and then to the bailiff – therefore, additional, significant costs of court and enforcement fees and attorneys’ fees will be incurred, which the debtor will be obliged to pay. The bank also has the right to claim our liabilities due from guarantors and guarantors, and may also sell the debt to other entities.

Therefore, if we are unable to pay off our loan obligations, be sure to contact the bank. Let us inform you about our problem and work together to work out a solution that will reduce the negative effects of our insolvency. I also encourage you to contact an attorney-at-law or legal adviser to fully learn and understand the options available to an insolvent borrower. Credit and the coronavirus is a difficult topic, but extremely important.

Lawyer Aleksandra Tabędzka

apl. lawyer Agnieszka Skoracka

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