Approach Your Bank Before Defaulting on Your Payments

This article will give you information and advice if you are behind with your monthly instalments.

From personal experience of 22 years as a senior credit and bank branch manager, I have discovered that banks are always willing to take what they can get, giving you one last chance to get back on your feet.

It is never too early or too late to contact your personal banker. You may be worried about talking to the bank. Hence, your first move should be to speak to your bank if you’re going through financial difficulties.

It is not advisable to run away from your debts. We need to understand that due to general increases in the cost of living, people are finding it increasingly difficult to keep up with their loan instalments.

To add to the trauma, people are also finding it difficult to sell their properties to get out of debt.

Hiking interest rates and increasing the cost of borrowing could depress the living standard.

Everyone feels the squeeze when inflation is on the rise and so the pressure on the Bank of Namibia to manage inflation rates has grown exponentially.
That could create its own feedback loop, driving prices higher.

This reality is frightening and potentially becomes very dangerous for the credit records of consumers.


But before you throw in the towel completely, talk to your bank manager to discuss whether the bank is willing to renegotiate the terms of your repayments.

Find out who the right people are to speak to.

It is important to keep in mind that the person you speak to is also human and will probably do everything in his power to try to help you.

This is, however, limited to clients’ willingness and receptiveness to engage and accept the alternative options.

It is also not wise to migrate to another bank, while leaving debts with your previous bank.

Citizens have a moral and ethical obligation to settle their debts.

Aother thing that happens is the continuous addition of late fees and other charges.

These hike the amount of money owed, which is even harder to pay off.

This means if you try to avoid debts by moving to another bank, you may just be allowing the bank to charge you more and institute legal action.

Furthermore, when approaching the bank, you must first establish exactly what the extent of your financial difficulty is and perhaps come up with a proposal as to how you think you would be able to honour your debt.

The bank could always make a counterproposal.

Remember, money worries don’t disappear if we ignore them – they usually get worse.

So, talk to your personal banker and see if you can come up with an alternative arrangement.

Start the conversation with the bank before it is too late.

If you are not getting anywhere, ask to escalate your problem to a senior manager and present your case.

If you reach an agreement, make sure you deliver.

You could negotiate for either one or a combination of debt-restructuring measures.

If you can show you are experiencing financial challenges as a direct result of Covid-19, you would be eligible for payment holidays.

The bank will then, on a case-by-case basis, be assisted with a suitable payment holiday based on your financial situation.

Moreover, here’s what you need to know about how debt consolidation and debt restructuring work and how to decide between them if you’re concerned about high debt balances.


Debt consolidation and debt restructuring are effective ways to tackle debt.

Debt consolidation works by combining all your existing loans into a single, larger debt loan.

In effect, your bank will pay off the previous debts, leaving you with only a single loan to repay.

It enables you to improve your cash flow and simplify your instalment.

However, there are several things to consider before you go ahead.

This includes the interest and fees on existing debts, interest charges on your new versus your existing debts, and repayment comparisons for your new loan.

It is important to note that debt consolidation loans don’t erase original debt.

Furthermore, debt restructuring involves reducing the interest rates on loans, deferment instalments due to be paid, or both.

Debt restructuring can be a win-win for both parties, because businesses want to avoid bankruptcy.

Therefore, taking a payment holiday during the term of your loan does not change your monthly instalment amount, but the term is extended to take into account fees and interest that accrue during the grace period.

In the end, the payment holidays will cost you more, but you would gain immediate relief due to a constrained financial position.

To this end, to negotiate with the bank from a position of strength and enhance your credibility, it’s essential that you identify the problem, take responsibility for it, and propose a reasonable solution.

This will immediately impress the bank, and it will be much more willing to make concessions on the loan.

There is also a good chance you will hear a ‘no’.

If so, don’t give up.

Instead, offer your next best solution.

There is a high possibility your bank may be willing to agree to one of those options.

  • Josef Sheehama is a banking industry professional with 22 years of experience. He writes in his personal capacity.
Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for only N$85 a month. Invest in journalism, invest in democracy – subscribe now!


Please enter your comment!
Please enter your name here

Recent Stories

Latest News

Most Read