Bad Credit
Bad credit or problem loans are loans that have difficulty paying off due to factors or intentional elements or due to conditions beyond the ability of the Debtor.
In Indonesia, there are 2 (two) types of credit:
- Current Credit, and
- Non-performing Loans:
- Substandard Credit
- Doubtful Credit
- Bad Credit
Cause
The appearance of problem loans does not happen suddenly, it will appear after going through a process, which can be caused by negligence or mistakes of the Creditors (financial service providers) or from the Debtors.
Creditor
Careless apply credit rules, it is too easy to give credit, the concentration of credit funds in a group of debtors, high-risk business sectors, lending that exceeds the ability limit, etc.
Debtor
Declining business conditions due to deteriorating general economic conditions, mismanagement, family problems, business failures, liquidity problems, force majeure, bad temper, etc.
Bad Credit Indication
- Deferral of abnormal obligations
- The unexpected investigation from another financial institution
- Internal problem
- Changes in the map of market participants / new competitors
- Increased use of overdraft facilities
- The company is in chaos
- Illegal activities were found for the business
- Request additional credit
- Request for an extension or reschedule of credit
- A business that is too expansive
- Other creditors protect the credit provided by requesting additional collateral or binding a notary for collateral
How to Settle Bad Credit
- Rescheduling
- Reconditioning
- Restructuring
- Liquidation
- BANKRUPTCY
- DELAYING DEBT PAYMENT OBLIGATIONS