No Ability To Make Payments Now
Sample Letter to Creditors: Unable to Pay Loan to Bank Due to No Ability to Make Payments
This is a sample template letter to your creditors explaining that you can no longer make payments at this time. Even though you have no ability to make payments now, before using it, make sure you know how to communicate effectively with your creditors.
Caution: This sample letter doesn’t work for every situation. It’s also important when communicating with creditors to use the term “alleged debt.” Here’s why. Please read this note before using this sample letter.
[Today’s Date]
[Creditor Name]
[1 Downtown Street]
[City, Province Postal Code]
WITHOUT PREJUDICE
ATTENTION: CREDIT DEPARTMENT
RE: ACCOUNT # 1234 567 890 SMITH, JOHN
Dear [Creditor]:
I am writing to inform you that my current income from [CPP, OAS, Disability Pension, Government Assistance, etc] is not enough for me to be able to make any payments towards my alleged debt at this time.
I respectfully request that you contact me by letter only going forward; please do not contact me by telephone. I will respond to any letters you send to me in a timely manner.
If at anytime I am in a position to resume payments on the alleged debt, I will contact you immediately to make appropriate arrangements.
I thank you for your patience and understanding during this difficult time.
This communication is provided solely for the purposes of notifying you to communicate in writing only and does not constitute an acknowledgement of the alleged debt described above.
Sincerely,
[your name]
[complete mailing address]
[phone number]
[account number]
FAQ’S
What happens if I just make my minimum payment?
If you only make your minimum payment on a credit card, overdraft, or line of credit, it can literally take decades – sometimes even more than 50 years – to repay the debt. This is because minimum payments aren’t designed to repay the debt. They keep you in debt and allow the lender to make a lot of money. If you find yourself in a situation in which you can rarely or never pay more than your minimum payments, contact us and speak with a credit cousellor. They’ll help you create an optimized, realistic budget, explore all your options (including debt relief options), and then create a plan to get you out of debt within a reasonable period of time.
What you can do when you can't make a loan payment?
If you are struggling to make a loan payment, there are a couple of things that you can do:
- Reach out to the lender and see if something can be done to help you through the difficulties you are currently going through. We have a resource on how to communicate with creditors effectively. This may be of some help to you.
- Speak with one of our credit counsellors. They can help you create an optimized, realistic budget, explore all your options (including debt relief options), and then create a plan to get you out of debt within a reasonable period of time.
Can I change the repayment rate?
An other way to get a much better interest rate and pay off unsecured debts quickly is to go onto a Debt Management Program. It will drop all interest rates to zero or at least significantly reduce them. However, there are some drawbacks to this debt relief program as it’s designed to help people who are really struggling. You can check out the pros and cons of this program here.
When does loan repayment begin?
What happens if you can't pay your bank loan?
While this all sounds very scary, it can usually be avoided by speaking with one of our credit counsellors. They can go over your situation with you and help you put together a plan to deal with your debt and creditors in a way that will work for everyone. This may involve entering a debt relief program of some sort and having a professional negotiate with your creditors on your behalf, or you may be able to do this yourself once you’re armed with the right information and know how to proceed. You can speak with one of our credit counsellors for free and get their input on your options and the ways you can move forward.
Need more help?
See how we can help you. Just answer 4 simple questions
If you can take a minute to answer these 4 multiple-choice questions, you can find out how we can help you. It will only take a minute, and what you discover may surprise you.
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Debt Forgiveness
When repaying your debt won’t be possible, this sample letter can help you communicate that.
Credit Counselling
Are you curious about what credit counselling is or how it works? Here’s what you need to know.
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