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What to Do When You Can’t Pay Back Your Bank Loan

Bank loans represent both secured and unsecured loans that are to be repaid by the borrower with interest on or before a fixed maturity date. The loan payments may be made monthly, semi-monthly, bi-weekly or weekly. The loan maturity dates commonly range between 1 to 5 years. The amortization period may be 1 to 5 years for personal loans and may be as long as 25 years for a residential mortgage.


Banks generally offer the lowest interest rates when compared to all other lenders and other forms of credit. Bank loan interest rates offered by the bank to individual borrowers will vary based on the borrower’s individual relationship with the bank, as well as their credit rating or credit history.


Common types of bank loans include:

  • Mortgages which are secured against a residence or other property
  • Motor vehicle loans which are secured against the vehicle
  • Personal loans which may be secured or unsecured
  • Personal lines of credit which may be secured or unsecured
  • Overdraft protection which is generally unsecured


Where there is a default in your loan payments, the bank will initially commence legal action to recover any collateral that is held as security for the loan. If a balance remains outstanding following the recovery and sale of the collateral by the bank or where the bank loan is unsecured, the bank will pursue other legal remedies, including bank account seizure, investment seizure, or garnishee wages or other income to recover amounts owed. The bank may also register a lien against your residence for the recovery.


To obtain protection from the bank and avoid legal action for the recovery of a bank loan, contact a Faber Trustee to review your options and discuss a consumer proposal or personal bankruptcy debt restructuring plan that is appropriate for you.

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