Loan restructuring was the main solution found by consumers and banks this year, following negotiations at the Alternative Banking Dispute Resolution Centre (ABDRC). Since the start of the year, more than 2,640 consumers have filed applications for negotiation with banks and NBFIs via the ABDRC. The main problems they reported were related to difficulties in paying their instalments. The majority of the 680 negotiations since the beginning of the year have resulted in the restructuring and rescheduling of loans, decrease of the loan balance, decrease of interest and cancellation of debts due to late payments. The solutions negotiated through the ABDRC conciliators were mainly aimed at reducing the monthly instalments and adjusting the loan agreements to the consumers’ current financial situation. ABDRC has recorded the highest number of applications and negotiation files in any one year since the start of its operations (2016).

In fact, loan restructuring and rescheduling was, along with refinancing, the main problem-solving option identified by consumers (33%), according to a CURS survey conducted in the summer of 2023 at the request of ABDRC.

How did consumers file their claims to the BANKS? What did they get?

Valentina Ailincăi, Bacău: “I am requesting help with the instalment payment of my loan and invoke very serious medical reasons. I have asked for help from the insurance company, but the amount they offer is tiny compared to the financial difficulties we are facing. At the same time, in the same loan, the guarantor requests to withdraw from the loan because he is no longer part of the family and will leave the country in the following period”.

Solution provided by conciliator Dragoș Gheorghe and accepted by the parties: The bank waives the overdue interest accrued/discounted up to the date of implementation of the decision, amounting to RON 2,400. The debt will be restructured by consolidating the two loan agreements into one. Interest will be decreased and the new balance will be charged a fixed interest rate of 6%. Previous interest rates for the two loans were 8.9% and 26% respectively. The lending period will be increased to 84 months. The current co-payer cannot be excluded from the credit, and no resolution has been found for this request.

Valentina Ailincăi: “It didn’t quite solve everything, but I’m happy. I got an extended maturity and instead of two instalments on a loan and a shopping card of nearly 2,000 lei, I now have one instalment of 650 lei. The loan was a consumer loan, but with kids in college and medical issues requiring monthly treatment, I could no longer repay it. The problem wasn’t that I didn’t want to pay, but I got sick and the expenses went up. I was always falling behind on my payments and borrowing to pay. It took about 2 months for the ABDRC. It went smoothly and without any effort on our part.”

How did consumers file their claims to the NBFIs? What did they get?

Dragoș Man, Bihor: “|I took out a mortgage in 2007 for CHF 63,000. I am asking for support in negotiating with the NBFI to find an amicable solution to ease the financial burden that I am finding increasingly difficult to cope with. If, at the time the contract was concluded, the amount borrowed was the equivalent of €38,000, it is now the equivalent of €43,000 after 15 years of payment.  The solution I thought of would be a 35% decrease in the loan balance. At the same time, I would also like to be repaid the loan granting fee of CHF 1,270.”

Solution provided by conciliator Vasile Nemeș and accepted by the parties: The merchant agreed to grant the consumer a 20% partial debt forgiveness (cancellation) on the loan agreement. The remaining difference following the partial cancellation will be repaid in accordance with the contractual provisions, in monthly instalments, until the end of the contractual period.

 Dragoș Man: I asked for a 30-35% loan balance reduction and we finally got 20% after 6-7 e-mail exchanges. Within a month or so everything was ready, I lowered my demands, they increased the amount originally proposed and we agreed. The conciliator did an excellent job and I felt that I was no longer alone in the dialogue with the bank, but was represented by an institution. It felt like I was dealing with them on equal grounds and that made me happy. I chose to use a lawyer at first, but he was unable to get anything from the bank, which is why I ended the collaboration with him. Then I called ABDRC directly, I knew about the Centre from the CHF Mortgages Customer Group. In the end, ABDRC was a better ‘lawyer’ than the lawyer.”

Other cases settled within ABDRC

Consumer V.P. from Buzău: “Ongoing contract with the bank, 3 overdue installments. I have been unemployed for 6 months and my husband’s company is having a hard time collecting payment for the invoices they have issued. Please understand the delay. Basically, I’ve been paying month after month for one year, but I’m still in arrears. I am requesting a rescheduling of the loan and lower installments. Please note that a sales job was promised to me in the agribusiness industry, with an above average salary.”

Solution provided by conciliator Valentin Cocean and accepted by the parties: The consumer’s loan will be restructured by including the overdue amounts in the loan balance, extending the maturity of the loan and granting a grace period of 6 months during which the consumer will pay a monthly instalment of RON 50. After the grace period, the installment will be 866 lei. The resulting loan will have a repayment period of 120 months and a fixed interest rate of 7%.

Consumer V.E from Ialomița: “Because of the general increase in prices, I have a bank payment that I can’t pay. I’m struggling to cope with these payments that I haven’t paid in full for a long time (…)”

Solution provided by conciliator Cosmin Vasile and accepted by the parties: The merchant and the consumer agree to restructure the debt, maintaining the initial costs which favored the customer and increasing the loan period according to the chosen option, to 36 months, with a monthly instalment of approximately RON 555. In order to benefit from this solution, at the time of signing the new loan agreement, the consumer will have to pay from her own sources the current arrears (approx. RON 700) as well as the restructuring costs (approx. RON 150).

Consumer B.M. from Vâlcea: “In 2007 I bought an apartment worth EUR 60,000. The loan was contracted in Swiss francs. The installment I pay now is CHF 547, around RON 2,700. I should mention that I have applied for a decrease of the installment. The bank did not give me an official answer, but bank employees told me that given the family’s income, I was not eligible for financial aid.”

Solution provided by conciliator Corneliu Mușat and accepted by the parties: The NBFI partially forgives the debt and reduces the outstanding balance of the obligations under the loan agreement by 15% of the current value of the obligations, and the loan will continue to be repaid on a repayment schedule adjusted to the new principal amount due.

Consumer M.R. from Bucharest: “I am going through a difficult financial situation, after having resorted to several loans from NBFIs in 2022, never thinking that I might end up being unable to repay them. The problems continued this year, in particular after I lost my job. While on probationary period, my employment contract was terminated without notice. I request a deferment of payment of the instalments without penalty interest.”

Solution provided by conciliator Corneliu Mușat and accepted by the parties: In relation to the consumer’s demands regarding the consumer loan agreement, the parties were proposed to settle the dispute by staggering the current debt in the amount of RON 4,090 in 10 monthly instalments of RON 409, with no additional penalties being calculated on this amount.

Alexandru Păunescu, representative of the National Bank of Romania in ABDRC: “We wanted to rephrase the consumer requests filed with ABDRC as faithfuly as possbile, also the way in which decisions are drafted following negotiations brokered by ABDRC conciliators, for two reasons: to show that negotiation requests are written in plain language and it is up to anyone who is having difficulty paying their instalments to enter into dialogue with the bank and prevent their financial situation from worsening. A second reason is to highlight the variety of situations that people can face, and the solutions that can be found in conciliation. Fortunately, in the 680 cases this year, banks, NBFIs (to a much lesser extent) and consumers found solutions through ABDRC and people overcame the financial difficulties they faced.

This shows that credit institutions have come to the aid of consumers, but also that we are seeing an increase in financial literacy among the population. People act faster when they encounter difficulties, get informed and engage more often with the bank or NBFI. The ABDRC is one of these ways of dialogue, through conciliation, and we are glad that amicable settlement is being accessed by more and more consumers and banks. These are signs of the financial health that Romanian society is currently showing.”

About ABDRC: ABDRC is an entity set up under an European Directive, and intermediates, free of charge and in not more than three months, negotiations between consumers and banks or NBFIs, for contracts/agreements in progress. Consumers from any county of the country may file applications with the Alternative Banking Dispute Resolution Centre (ABDRC) filling-in an online form directly on the website www.csalb.ro. Once the bank accepts to enter the conciliation/negotiation procedure, a conciliator is appointed. ABDRC works with 17 conciliators, of the best specialists in law and with relevant experience also in the financial and banking field. Everything is settled amicably, and the understanding between the parties has the power of court judgment. More information about the work of the Centre is available by phone at 021 9414 (charged a normal rate).