Lawsuit with the bank – bank sued over a loan

What to do if the bank has filed a lawsuit for loan non-payment?

If you are looking at ads like: «how to legally get rid of a loan», you should understand the following. There are no simple, risk-free and inexpensive, yet lawful ways to get rid of a loan. These are just slogans to attract your attention. Often a lawsuit with a bank comes down to reducing the debt amount or postponing the time of payment. And you need a lawyer not to make promises that the debt will not have to be paid at all. You need a lawyer to realistically assess your situation: what the bank can do and what you can expect.

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Natalya Chazkis Senior Partner

In recent years, the situation with problematic loans has only intensified. This is primarily due to the unstable economic situation in the country and the tricks embedded in loan agreements. Debtors should understand that, based on judicial practice in Ukraine, courts in cases of loan non-payment often rule in favor of the creditor. Therefore, this issue must be approached with utmost seriousness.

No one disputes that obligations assumed should be fulfilled. But sometimes even the most conscientious borrowers find themselves in a situation where their financial condition does not allow them to repay a loan for an indefinite period. The times when banks were limited to written warnings that they would file a lawsuit, but usually did not go further, are gone. Lawsuits over loans are no longer uncommon, and many people who find themselves in a difficult financial situation become parties to legal proceedings. The crisis that hit the banking sector forced these institutions to completely change their relationships with debtors. Now debt collection cases are opened regardless of the amount of the debt.

Court proceedings over loans can provide a small respite for the debtor. What to do if the bank has filed a lawsuit for loan non-payment? First of all, do not panic. It is better to calmly study all the nuances of the case: your loan agreement and the legislation currently in force in the lending sphere. You should immediately be prepared for the fact that a lawsuit with a bank is an extremely complex matter.

Financial institutions have a staff of qualified, well-informed lawyers. Therefore, if you are wondering how to beat a bank in a loan lawsuit but are not strong in jurisprudence, seek help from professionals. Specialists of the legal association “Nakaz” will study all case materials, conduct a thorough examination of your contract, be able to uncover, if present, embedded pitfalls or creditor miscalculations, and determine optimal ways to solve the problem. Of course, no lawyer can free you from repaying a loan. Debts must be paid, but with a well-prepared evidentiary base with our help, a lawsuit with a bank over a loan can result in a significant reduction of penalties, a lower interest rate and other concessions.

A financial institution, of course, will not prepare a claim if your overdue on the loan is only 2-3 weeks. As a rule, a bank files a lawsuit for loan non-payment when the payment is overdue by more than 1 year. This position is quite explainable: the creditor seeks to recover its funds by any means. The banking institution does not care what amount the borrower owes: millions of hryvnias or a few thousand. The credit organization will not consider that court costs may exceed the client’s total debt. The bank’s goal is to create a precedent, win the case and show other clients that it will not forgive or give anything to anyone. In this way, the bank tries to protect its reputation.

Another reason banks start legal proceedings over a loan is that the institution does not have the right to write off any overdue debt (its losses) without a court decision. In addition, according to the legislation, the creditor has the right to seek debt recovery only within three years from its occurrence. For this reason, financial institutions try not to delay this matter and promptly file claims in court. You may receive a notice that the bank has filed a lawsuit for loan non-payment after just a few months of delay and, as a rule, after several attempts by the creditor to resolve the matter peacefully.

1. Do not panic. Emotions can only hinder in this matter. You need to pull yourself together, familiarize yourself with the claims made and soberly assess the situation. First, study the following questions:

2. If the bank has filed a lawsuit for loan arrears, do not ignore court summonses. Your absence and lack of defense is practically a guarantee of full satisfaction of the creditor’s claims. If, however, you make every effort to find violations in the contract, reach the court and at least reduce the recovery amount, it is almost always possible.

If the loan agreement was concluded after 16.10.2011, pay special attention to Article 11 of the Law “On Protection of Consumer Rights“, into which many changes were made to protect borrowers’ interests.

3. What to do if the bank has filed a lawsuit for non-payment of a loan? You must familiarize yourself with the case materials. As a general rule, the court for loan non-payment is held at the defendant’s place of residence, so you should either go (with your passport) to the court at your place of residence or check on the court’s online portal whether there is indeed a statement of claim from the bank against you. If no statement is found, you should search in the court at the bank’s registration address. Also examine the loan agreement, as a specific court may be indicated there. This step is necessary in order to:

Sample motion to review case materials

4. At the stage of court consideration – attend all hearings, monitor the legality of all actions in the process, and the possibility to challenge certain actions or contract provisions. For example, try to reduce the amount of the penalty. Part 3 of Article 551 of the Civil Code of Ukraine provides for the possibility of reducing the penalty by the court, for example, if its size significantly exceeds the damages.

5. At the stage of enforcement proceedings – closely monitor all actions of the enforcement officer and, if necessary, appeal them (violations occur frequently).

Sample motion to appeal the inaction of a state enforcement officer

In practice, creditors (including banks) do not rush to go to court immediately in the event of a borrower’s non-payment. There are several reasons for this, in particular that court proceedings are fairly lengthy and tedious, require collection of a mass of documents, and that during the entire period of payment arrears the debtor will accrue penalty sanctions and the creditors’ claims will relentlessly grow. Therefore, if the bank still filed a lawsuit, it means it is serious and will try to recover the maximum possible amount from the debtor to cover all its costs associated with the legal proceedings.

If you are wondering how to win a lawsuit against a bank or simply do not know what to do if the bank has filed a lawsuit over a loan, start solving your problems by finding a competent lawyer.

Why the bank does not file a lawsuit

Many are surprised why banks do not sue debtors in certain situations. After all, they want to get their money back, and the longer the delay, the lower the chances of repayment. The thing is that the court can force only a person who has a salary or property to pay.

With a good lawyer you will not have to worry about whether you can practically win a lawsuit against a bank and have the loan agreement reconsidered. If the client truly has no possibility to pay interest and the loan principal, it is possible to achieve:

• a reduction of the loan principal, interest and penalties;
• the write-off of interest, penalties and even part of the debt;
• an extension of the loan repayment period.

Many are also interested in whether they can sue the bank for calls to relatives, friends, and so on. The loan agreement always contains a clause on partial transfer of personal information in case of overdue debt. Of course, there are exceptions to the rules, but for that you need a more detailed review of your case.

Why a debtor, if sued for loan non-payment, is better off seeking qualified professional help

1. Banks and other creditors can afford the services of highly qualified lawyers and they always do;
2. Loan agreements are drafted by the same experienced lawyers who have provided for the resolution of all possible nuances in favor of the client, i.e., the creditor. And if anyone can find weak points in such a contract, it will only be another professional;
3. Some loan agreements stipulate that all disputes will be heard in a specific court, often an arbitration court. The debtor should understand that the creditor is not turning to this court for the first time and his chances of winning the case are much higher. The debtor will have to closely monitor that the court does not allow any violations;
4. The debtor is indeed in a losing position and the claims against him are absolutely lawful (except in cases of fraud). Therefore, it is necessary to understand that winning the case in this situation does not mean being freed from debt obligations (although under some circumstances and with professional work by a lawyer this option is also possible), but to minimize the claim amount and exit the situation with minimal financial losses.

The lawyers of our firm advise citizens who have been sued by financial institutions for loan non-payment not to despair. Despite the fact that the court usually rules in favor of the bank, the debtor can also benefit in such a situation, especially when prolonged arrears have occurred. Besides the principal debt, which must undoubtedly be repaid, the creditor charges the debtor substantial fines and penalties that often exceed the total debt. And as the practice of our specialists in loan disputes shows, it is these extortionate amounts that can be reduced to a minimum by a court decision, and you may be given a lenient repayment schedule.

What to do if the bank filed a lawsuit? Do not hide from the bank and the courts. Collect evidence of your willingness to repay the accumulated debt and your current inability to do so. Consult with lawyers about your further actions. If possible, entrust specialists with handling your case and as a result your seemingly unsolvable situation, as well as the legal proceedings as a whole, may end up to your advantage.

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