We have a personal unsecured loan with our local bank that we have not been able to stay current on due to a 50% income loss in 2008. We have paid on the loan for 2 1/2 years and there is a little over a year left on payments ($22000 balance, original loan $46000) We have communicated our situation for months with the bank and they are relentless in harassing us to get a payment. They will not accept partial payments and tell us that we MUST commit to a payment schedule to avoid a judgement being filed against us. My husband is a commissioned sales person and we do not know what his checks will be until they are deposited in our account. It varies greatly from month to month. The monthly payments on the loan are 1350.00 and hard to make up when we are behind four months. I just made a payment yesterday of $1500 and they told me they were "in the process" of sending our account to money judgement. We have made payments when we are able to but we had to make up our mortgage payments which were behind 3 months and our car payments which were also behind three months. We also had to recently pay our 2008 real estate taxes as well to avoid a tax lien on our home.

What are our rights concerning this? We have done what we could to pay but with the 50% income reduction for a year we are doing what we can. We have been customers of this bank for 25 years. I realize they have to protect their interest in this, but we are doing all that we can. We have nothing left in our 401K accounts and there is no equity remaining in our home. No one to borrow money from as we have exhausted all of our options.

Please advise.

Inability to pay is not a legal defense. The creditor will most likely attempt to obtain a Judgment against you for the balance and fees and then attempt to enforce that Judgment under the laws of your State.

Your situation is what is really upsetting in the current economy - banks took chance and then want to get snitty when the future they were looking at tanked with the very customers they were happily pleased to loan too. In the process is not on the courthouse steps. If they turn it over to debt collectors, they should know that not only will they have to pay them but in a lot of cases the debt collectors may make a deal with the debtor. A lose lose situation for them.
If the person you are talking to is not a manager, then ask to speak to the manager. Request what is known as a "hardship" deferment If the manager still refuses to renegotiate the loan and interest payments, you can only advise him/her that you can't make any definite scheduled payments until earnings return to prior status but you will continue to work towards paying the agreed upon amount that this is a hardship situation.
You do need to go over your everyday expenditures and work out how you can save as much as you can. Use coupons for groceries, buy in bulk look every way you can to save to add money to this loan payment. It is hard to tighten your belt so to speak but it can be done. Good luck

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Originally Posted by Cedarln2265

Your situation is what is really upsetting in the current economy - banks took chance and then want to get snitty when the future they were looking at tanked with the very customers they were happily pleased to loan too. In the process is not on the courthouse steps. If they turn it over to debt collectors, they should know that not only will they have to pay them but in a lot of cases the debt collectors may make a deal with the debtor. A lose lose situation for them.
If the person you are talking to is not a manager, then ask to speak to the manager. Request what is known as a "hardship" deferment If the manager still refuses to renegotiate the loan and interest payments, you can only advise him/her that you can't make any definite scheduled payments until earnings return to prior status but you will continue to work towards paying the agreed upon amount that this is a hardship situation.
You do need to go over your everyday expenditures and work out how you can save as much as you can. Use coupons for groceries, buy in bulk look every way you can to save to add money to this loan payment. It is hard to tighten your belt so to speak but it can be done. Good luck

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A hardship deferment is seldom granted because the bank can't afford to allow this debt to go beyond the Statute of Limitations.

What is the Statute of Limitations?

Six years from the last activity on the account.

Well, then I don't understand why the bank would be in such a hurry to file a judgement since I have been making payments on the account all of this year. Are they just saying this to scare us do you think?

No way to know whether they are serious - they also may be afraid that if you are unable to pay them you are unable to pay other creditors and they want the first Judgment in line.

Not trying to scare you - just saying what could happen.

These are certainly terrible financial times and I wish I had something wise/wonderful to offer you. I can only tell you how these things "usually" work, unfortunately.

It is easy to blame the bank for granting too much credit but the bottom line is that you have a contract with them and are expected to meet the terms of the contract - but it appears that you know and understand that.

The fact that they get a Judgment doesn't mean they will move to enforce it. It's sort of like insurance and the bank may very well hold onto it until you are back on your financial feet and able to pay.

Thank you for your help and information on all of this. I greatly appreciate it. I am confident that we will eventually work this out. Your advice has helped greatly! Have a great day!

Thank you - I truly hope things work out for you. Let us know if you have any additional problems and we'll all pool our thoughts and see if we can help.

(Almost nobody says thank you so I am very so very pleased by your post.)

I will definitely keep in touch. It is a relief to know that there are people like you who care enough to help those of us in difficult situations. Thanks again!