Lease obligations restructuring options for private customers

First steps towards solution

The first step in dealing with the situation is assessing the situation and identifying what the customer can do themselves. The next thing is arranging a meeting with the loan officer. The loan officer is the person, who best understands the client’s situation and, by discussing it with client, will be able to find the most appropriate solution. It is important to remember – the sooner the situation is clarified, the easier it will be for you to handle it – especially if the solution is sought already before the potential overdue payment. If you don’t know who your loan officer is, you can find that out by calling the information line on 67444445.

The second step is presenting documents to the bank. To start addressing the situation, the loan officer may request the customer to supply various documents relevant to the situation. For example, rent contract, employment contract, contract which confirms your status of being unemployed, a note from the doctor confirming incapacity to work.

The third step is, together cooperation with the bank, to look for the best solutions that would help perform the obligations and agree on the further course of action. The bank will decide on solutions what would help cover monthly payments for loan obligations. After deciding on the particular solution, contracts are prepared, which will come into force after signed.

Customer’s action in case of difficulties with lease payments

If you find yourself struggling with lease payments, it is critical to be aware of the situation and assess what you can do yourself.

• If you’ve lost your job, first go to the State Employment Agency and register. That will provide the following opportunities:
  • get the jobless benefit
  • get information about vacancies and job offers
  • participate in temporary, paid public works programme
  • get professional training or re-training
  • get a stipend during professional training
  • The State Employment Agency’s website (www.nva.lv) offers all information that one should know in case of job loss, and also information on how to get the status of the unemployed, about temporary job opportunities, the chance to create an attractive CV, to view current vacancies, etc.
• In case of health problems, which prevent from performing job duties partially or completely, you need to get an official note from your doctor.
• Give consideration to asking friends or relatives for help, by acting as guarantors, as well as considering whether you have a possibility to provide additional collateral for the existing lease contract.
• Give consideration to renting your property.
• Give consideration to selling the car or other real estate, as well as considering other actions that would improve solvency.
• Contact your loan officer and arrange a meeting, during which you’ll get a chance to talk through all measures already taken and to sign an agreement with the bank for the agreed solution (lease restructuring by the bank) and actions, which you’ll have to take and which will improve your solvency in the long run.

Solutions offered by the bank

It is important to remember that there is a way out of every situation, however one must be aware of the seriousness of the situation and approach their loan officer before the payment becomes overdue.

Each situation is unique and is treated on a case-by-case basis, hence it is vital to discuss with your loan officer the circumstances, which have led to insolvency – be it job loss, division of property due to divorce, becoming unable to work, or other serious reason.

Swedbank offers a number of solutions for its customers, which may be combined depending on the particular case:

• ‘Leasing holiday’ or postponement of principal repayments for up to 3 months – for a certain period, the customer is allowed to pay only interest on the lease amount.
• Lease repayment schedule or period extension with a view to reducing monthly payments.
• Change of lease currency. For example, change of lease currency from lati to euros, may reduce the monthly lease payment. For example, change of lease currency from lati to euros, may reduce the monthly lease payment.
• Changing the interest rate type. The fixed rate is normally higher than variable rate. Swift from fixed rate to variable rate may substantially reduce the amount of monthly lease payments especially in the present situation of plummeting Euribor rate (i.e. the price of euros on interbank market).
• Renting or selling the property. The leased item may be sold at a price lower than the residual lease liabilities, and the difference may be repaid according to a new payment schedule.