I recently met one of my old acquaintances, and he asked me an interesting question:
— I have a late payment at the bank. Today they called and said: return half of it, and we will forgive the entire debt and all the interest!
He wondered if he was being tricked. Maybe there was some trick that would backfire later?
I had never encountered such situations before, but since I knew the manager of that bank, I immediately called him. It turned out that the bank was going to sell debts to collectors, so if the client paid at least half of the debt, it would be more profitable for the bank — the debts were given to collectors for pennies.
Having understood what was going on, I reassured my friend that there was no trickery here, and if there was an opportunity to pay, it could even be very profitable. After all, collectors will demand to repay the entire debt.
Why do banks agree to forgive part of the debt and interest to debtors?
You won't believe it, but there is a certain benefit to this.
The thing is that when a bank issues loans, it accumulates part of the funds in a special account called the “Reserve for possible losses”. The greater the risk of non-repayment of the loan, the more the bank needs to transfer funds to create such a reserve. The reserve for a regular loan may be 1%, but if the client has committed a delay of more than 180 days, the bank is forced to create a reserve in the amount closer to 100%. The bank creates the reserve at the expense of its own funds, that is, it is an expense for it.
But when the bank gets rid of the loan (i.e. when the client repays the loan or the debt is sold to collectors), the reserved amount is transferred directly to the account where income is recorded. That is, from the point of view of accounting, the bank will receive income. Of course, mathematically the bank does not earn anything from this operation, but it is positively reflected in the bank's reporting: overdue debt has decreased, and income has increased!
What to do if you receive such an offer?
If you are in default on your loan and you receive such an offer, there are just a few things you need to know:
To repay at least part of the loan, you will need money. There are different opinions about taking out a loan from another bank (or microfinance organization) for this. You will then need to repay the new loan. And if you did not manage with the first loan, will you be able to handle another one? Therefore, first decide whether you have the money, whether you will be able to close this debt in this way and contact a lawyer or financial advisor for advice.
If you decide to take advantage of the bank's offer, then ask the bank for a draft agreement (or additional agreement) – in general, a document that spells out everything, down to the amount. Your task is to make sure that after payment, the loan will be closed completely. After all, banks sometimes make verbal offers, but without documents, the debt can “come to life.”
After signing this agreement and after you have deposited the money, ask the bank for a certificate stating that the loan has been repaid and that you owe the bank nothing.
Keep in mind that if the bank “provided a discount,” then from the tax authorities' point of view you received an “economic benefit.” The bank will definitely notify the tax authorities about this, and may even ask you to pay an additional amount for tax purposes.
But most importantly, you should not expect that the bank will necessarily make you such an offer. Also, the offer will not always be exactly “half” – it depends on the bank, the amount of the debt, the term of the delay, and individual circumstances. Do not bring the matter to arrears!
