How do you deal with bad debts? Rescheduling conditions
In light of increasing financial challenges, many individuals may find themselves facing financial obligations that are difficult to meet on time, making debt rescheduling an important option to reorganize the financial situation and relieve pressures.
Whether you are facing financial default or seeking to manage your debts more efficiently, knowing the terms of debt rescheduling in Saudi Arabia gives you the ability to make informed financial decisions and opens up legal solutions that help you regain your financial stability with confidence.
What is meant by debt rescheduling?
Debt rescheduling means amending the loan repayment schedule for the defaulting debtor by extending the repayment period to reduce the debt burden on him, without calculating additional fees upon extension.
Debt rescheduling differs from refinancing in that debt rescheduling means extending the debtor’s debt repayment period and postponing the maturity date in proportion to the debtor’s financial situation.
While refinancing takes place when the customer requests an additional loan or financing from the bank or financing entity to cover his expenses and financial obligations.
What are the rescheduling conditions at the Central Bank?
The first paragraph of Article 9 of the Collection Controls and Procedures clarifies the conditions for rescheduling, which are:
- Proof of the customer’s failure to pay the monthly installments in the event of:
- Failure to pay the monthly installment, in whole or in part, for 3 consecutive months.
- Late payment of 5 separate installments for 7 business days or more.
- Proof of the customer’s failure to pay non-monthly installments in financing contracts due quarterly, semi-annually, or annually, in the event of:
- Late payment of the installment for a period exceeding 60 working days.
- Delay in paying four separate installments for a period of 20 working days from the due date agreed upon in the financing contracts.
- Late payment of installments for more than 5 separate months throughout the financing period.
Does the bank have the right to refuse to reschedule the loan?
Does the bank have the right to refuse to reschedule the loan?
The bank does not have the right to refuse to reschedule a subsidized real estate loan, personal loan, etc. if it is proven that the customer has defaulted on payment due to a reason beyond his control that affects his ability to pay, such as job loss, insolvency, etc.
What are the legal procedures for debt rescheduling in Saudi Arabia?
Finance companies and banks must, in accordance with Paragraph 2 of Article 9 of the Collection Controls and Procedures, take proactive measures and solutions when a change appears in the customer’s credit status that could lead to his default, including:
- Accept the customer’s rescheduling request within 20 days from the date he submits the documents proving his failure.
- Offering the customer the option to reschedule a personal or other loan if his circumstances are proven to have changed without granting new financing or adding additional fees.
Debtor’s rights when rescheduling
Debtor’s rights when rescheduling
- The right to request rescheduling of loans and debts when he is unable to repay them, provided that the necessary evidence is provided.
- Not to deduct any amounts from his bank accounts without a court ruling.
- Failure to deduct the installment before its due date.
- No additional fines or fees will be imposed when accepting a rescheduling request.
- Protection from arbitrary conditions.
Debtor’s obligations after rescheduling
- Commitment to the new payment plan agreed upon in the debt rescheduling request form between the debtor and the bank.
- Avoid delays in paying new installments to avoid legal action resulting from failure to pay them on the dates agreed upon with the bank.
- Continuously updating the financial statements and notifying the bank of any change in its credit and financial status.
Advantages of debt rescheduling
- Reducing financial pressure on the customer.
- Avoid legal defaults and find realistic solutions that help keep the payment process going in line with the debtor’s financial situation.
- Improve the bank’s cash flows by postponing the debt maturity date.
Debt rescheduling risks
- Increasing the repayment period, which may drain the debtor financially.
- Debt rescheduling prevents the debtor from obtaining future loans.
- Impact on the customer’s credit history.
Important tips before requesting a rescheduling of your personal loan and other debts
- Assess your financial ability accurately and do not rush into making a decision that may burden you financially.
- Compare available offers and discuss alternative options with the bank.
- Read the terms and conditions carefully and ensure that they do not violate the regulations and rules of the Saudi Central Bank.
How do you deal with bad debts? Rescheduling conditions
When is it recommended to hire a specialized lawyer?
It is recommended to seek the assistance of a skilled lawyer specializing in financial cases from the office of Lawyer Abdul Majeed Al Rashid when the debt becomes complicated, there is a dispute with the bank, or if the rescheduling terms are unclear or include clauses that may be unfair to you.
The presence of a competent lawyer also becomes essential when defaulting on payments or facing legal claims, as it helps you negotiate legally properly, review financing contracts, and ensure the drafting of a fair agreement that protects your rights and reduces future risks.
Hiring a specialized lawyer gives you accurate legal insight and enables you to make informed financial decisions with confidence.
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