You’ve defaulted on your loan. The interest has piled up. The charges keep accumulating. Moreover, the calls and messages are overwhelming. You feel stuck, ashamed, or paralyzed by the growing debt.
First, take a breath. You’re not the first person in this situation, and you won’t be the last. Additionally, the fact that you’re reading this article shows something important: you want to make things right. That intention matters more than you know.
This guide provides practical, empathetic steps to honor your commitment, reduce what you owe, and rebuild your financial standing. Therefore, let’s address your situation head-on with actionable solutions detailed in the below steps.
Step 1: Face the Numbers Honestly
Avoiding your debt doesn’t make it disappear. Instead, it grows larger daily. Therefore, the first step is confronting exactly what you owe.
Request a Complete Breakdown
Contact the lender (via email, app, or customer service) with this message:
“I acknowledge my loan default and want to resolve this situation. Please provide a complete breakdown showing:
- Original loan amount
- Original interest agreed upon
- All late fees added
- All penalty charges added
- Daily interest accumulation
- Current total balance
- Breakdown by date of each charge
I need this information to understand my obligation and create a repayment plan.”
Important: They must provide this breakdown under consumer protection principles. If they refuse, note this refusal, it strengthens your case if you need to negotiate or report them.
Verify the Charges Are Legitimate
Once you receive the breakdown, check if the charges match your original agreement:
Red flags to watch for:
- Charges not mentioned in original terms
- Interest rates exceeding what you agreed to
- Penalties appearing before the grace period ended
- Multiple charges for the same “fee” with different names
- Amounts that seem arbitrary or unexplained
If you find discrepancies, document them. You’ll use this information when negotiating. Additionally, some of these charges might be illegal, giving you leverage to reduce the debt.
Calculate What You Actually Owe (Legally)
Based on your original agreement:
Simple formula: Original Loan + (Original Interest Rate × Loan Period) + Legitimate Late Fees = What You Should Owe
Example:
- You borrowed: ₦10,000
- Agreed interest: 10% monthly for 1 month
- You’re now 2 months late
- Original agreement would be: ₦10,000 + ₦1,000 (first month) = ₦11,000
- Reasonable late fee: ₦1,000-₦2,000
- Legitimate total: ₦12,000-₦13,000
If they’re claiming ₦25,000, there’s room for negotiation. However, even if all charges are legitimate, you can still negotiate,we’ll show you how.
Step 2: Assess Your Financial Reality
You can’t create a repayment plan without knowing what you actually have available.
The Brutal Honesty Exercise
List your monthly income:
- Salary (after tax)
- Side hustles or freelance work
- Any other income sources
- Total: ₦_______
List your essential expenses (only things you absolutely cannot skip):
- Rent/housing
- Food (basic groceries, not eating out)
- Transportation to work
- Utilities (electricity, water)
- Children’s school fees (if applicable)
- Critical medications
- Total essentials: ₦_______
Your available amount: Monthly Income – Essential Expenses = ₦_______ available
This available amount is what you can realistically use for debt repayment. Be honest here, overcommitting leads to another default cycle.
What If There’s Nothing Left?
If your essential expenses equal or exceed your income, you need to address this first before any repayment plan will work:
Immediate income increase options:
- Take temporary side work (delivery services, freelancing)
- Sell items you don’t need
- Request overtime at your job
- Find short-term gigs online
Expense reduction options:
- Temporarily move to cheaper accommodation
- Reduce transportation costs (commercial transport instead of car)
- Cook at home exclusively
- Cut all non-essential subscriptions
These aren’t easy decisions. However, they’re temporary sacrifices to get back on track. Moreover, they demonstrate to lenders (and yourself) that you’re serious about resolving this.
Step 3: Negotiate Like Your Future Depends On It (Because It Does)
Negotiation isn’t begging. Rather, it’s finding mutually beneficial solutions. You have more leverage than you think.
Your Leverage Points
1. “Something is better than nothing” Lenders know that many defaulters pay zero. Therefore, your offer of anything is better than their alternative of prolonged collection efforts.
2. “I’m acting in good faith” You’re initiating the conversation, proposing solutions, and showing commitment. This distinguishes you from people who disappear completely.
3. “Illegal charges can be reported” If they’ve added charges not in your agreement or violated FCCPC regulations, mention this: “I’ve identified charges that weren’t disclosed in the original agreement. I want to resolve this amicably rather than involving FCCPC.”
4. “Your collection costs will exceed my offer” Recovery efforts cost money. Mention: “Extended collection will cost you time and resources. My immediate settlement offer recovers more net value for you.”
Negotiation Techniques That Work
Start lower than your real offer: If you can pay ₦10,000, offer ₦7,000 first. This gives room to “meet in the middle” at your actual target.
Use time pressure: “This offer stands for 48 hours. After that, my financial situation may change and I cannot guarantee availability of these funds.”
Be persistent but respectful: If they reject your first offer, don’t give up. Respond: “I understand. What counter-offer would you consider acceptable? I’m committed to finding a solution.”
Get creative with timing: “I can’t pay ₦20,000 now, but I’m expecting [salary/freelance payment/sale] on [date]. I can pay ₦15,000 on that specific date if you’ll accept.”
Request interest freeze as trade: “I commit to this payment plan if you agree to freeze all new interest and penalties. Otherwise, I’ll never catch up even while paying.”
What If They Won’t Negotiate?
Some lenders refuse any negotiation and demand full payment immediately. However, this doesn’t leave you powerless:
Option 1: Make partial payments anyway
Even if they won’t “officially” accept your plan, start making regular payments of whatever you can afford. Include a note with each payment: “Partial payment toward outstanding balance. Continuing monthly until cleared.”
This creates a payment history showing good faith effort. Additionally, it legally strengthens your position if matters escalate.
Option 2: Pay the legitimate amount only
If you’ve calculated that you legitimately owe ₦15,000 but they’re claiming ₦30,000, pay the ₦15,000 with this note:
“Payment in full of legitimate obligation calculated as: [show your breakdown]. Additional charges beyond original agreement are disputed. This payment constitutes full settlement of the original loan obligation.”
Keep records of everything. Subsequently, report their refusal to accept legitimate payment to FCCPC.
Step 4: Execute Your Plan Flawlessly
Once you’ve negotiated an agreement (or decided on your unilateral payment plan), execution is everything.
Make Your First Payment Immediately
Don’t delay even one day after reaching an agreement. Your credibility depends on this first payment arriving exactly when promised. Therefore, treat this deadline as sacred.
Set Up Payment Reminders
Use multiple reminder systems:
- Phone calendar alerts (3 days before, 1 day before, on the day)
- Alarm reminders
- Written note on your wall
- Ask a trusted friend to remind you
Why so many reminders? Missing even one payment can destroy the entire arrangement and put you back to square one.
Pay Through Traceable Methods
Always pay via:
- Bank transfer (keep confirmation screenshot)
- Mobile banking (save transaction reference)
- Official payment channels in the app
Never pay through:
- Cash to a recovery agent (no proof)
- Personal accounts not officially confirmed
- Untraceable methods
Keep every single receipt and confirmation. Moreover, store them in multiple places (phone, email, cloud storage).
Send Payment Confirmation
After each payment, send this message to the lender:
“Payment of ₦[amount] completed on [date] toward loan obligation. Transaction reference: [number]. Current balance remaining: ₦[amount]. The next payment is scheduled for [date].”
This creates an undeniable paper trail. Additionally, it keeps both parties clear on the status.
Document Everything
Maintain a simple spreadsheet or notebook:
- Date of each payment
- Amount paid
- Transaction reference
- Remaining balance
- Next payment due date
This helps you track progress and provides motivation as you see the balance decreasing.
Step 5: Handle Continued Harassment During Repayment
Some lenders continue aggressive collection tactics even after you’ve started paying. This is both frustrating and unnecessary.
Assert Your Boundaries
Send this firm but professional message:
“I am making regular payments according to our agreement [date]. The next payment is scheduled for [date] and will be made as committed. Continued harassment violates FCCPC regulations and is unnecessary given my consistent payment history. Further harassment will be reported to authorities while I continue honoring the payment schedule.”
Document Everything
If harassment continues despite your payments:
- Screenshot all threatening messages
- Record dates and times of excessive calls
- Note any contact with third parties
- Gather your payment receipts
This documentation allows you to report them while maintaining your own integrity by showing you’re paying as agreed.
Know When to Report
If they:
- Contact you more than twice daily despite regular payments
- Continue contacting your family despite your compliance
- Add new unauthorized charges after your agreement
- Refuse to acknowledge your payments
File a complaint with FCCPC. Your consistent payment history strengthens your case significantly. Moreover, you’re demonstrating that you’re honoring your end while they’re violating regulations.
Step 6: Rebuild After Repayment
Completing your repayment is a significant achievement. However, the work isn’t quite done yet.
Get Written Confirmation
Once you make your final payment, immediately request:
“Please provide written confirmation that the loan account [number] is paid in full with zero balance remaining. Include confirmation that this will be reported to credit bureaus as ‘Paid’ or ‘Settled.'”
Don’t assume it’s handled. Get explicit confirmation to avoid surprises later.
Check Your Credit Report On Pebblescore
Three months after final payment, access your credit report from all three Nigerian bureaus:
- CRC Credit Bureau
- CreditRegistry
- FirstCentral Credit Bureau
Verify that:
- The loan shows as “Paid” or “Settled”
- No outstanding balance appears
- The account is closed
If errors exist, dispute them immediately using PebbleScore to get them updated.
Learn from the Experience
Ask yourself honestly:
- What led to the default? (Job loss, poor planning, unexpected emergency?)
- What could I have done differently?
- What warning signs did I miss?
- How can I avoid this situation in the future?
This reflection is crucial for preventing repeat situations. Moreover, it transforms a difficult experience into valuable wisdom.
Build Better Financial Habits
Moving forward:
Have an Emergency fund: Start small, even ₦500 weekly adds up. This buffer prevents future loan dependency.
Budget tracking: Know exactly where your money goes monthly. Many free apps help with this.
Borrowing rules: Only borrow for true emergencies, never for wants. Additionally, ensure repayment fits comfortably in your budget before accepting.
Credit monitoring: Check your credit report annually to catch issues early.
Use PebbleScore to Rebuild
After defaulting and recovering, rebuilding your credit becomes essential:
PebbleScore helps by:
Monitoring your recovery: Track how your credit score improves as time passes from the default.
Reporting positive behavior: Use our tools to report airtime and utility payments, building positive history.
Disputing errors: If the default was reported incorrectly or remains after payment, we help you dispute it.
Finding better options: As your credit recovers, we connect you with ethical and registered lenders at better rates, reducing future default risk.
The Mental and Emotional Journey
Defaulting on debt carries emotional weight beyond the financial burden. Therefore, addressing the psychological aspect is important.
Dealing with Shame
Remember:
- Financial difficulty doesn’t define your worth as a person
- Defaulting due to unexpected circumstances isn’t a moral failure
- Taking action to fix it shows character and strength
- Many successful people have faced similar situations
Shame keeps you stuck. Action moves you forward.
Managing Stress
Debt stress is real and serious. Therefore, practice:
- Talking to a trusted friend (the silence is often worse than the confession)
- Focusing on your progress, not just the remaining balance
- Celebrating small wins (each payment is an achievement)
- Remembering that this situation is temporary
When to Seek Professional Help
If debt stress is causing:
- Severe anxiety or depression
- Thoughts of self-harm
- Inability to function daily
- Physical health problems
Seek professional mental health support immediately. Your wellbeing matters more than any debt. Moreover, you can’t effectively solve financial problems if you’re not mentally healthy.
Conclusion: Your Fresh Start Begins Today
You defaulted. The debt accumulated. However, you’re here, reading this, looking for solutions. That shows something powerful about your character.
The past is done. What matters now is your next action. Therefore, follow these steps:
- Face the numbers honestly
- Assess what you can realistically afford
- Create your repayment strategy
- Negotiate firmly but respectfully
- Execute your plan flawlessly
- Rebuild systematically after completion
This won’t be easy. Some payments will stretch you thin. Moreover, you’ll need to make sacrifices. However, each payment brings you closer to freedom and rebuilds your financial integrity.
Remember: You’re not just paying off debt. You’re building character, protecting your future, and proving to yourself that you can handle difficult situations with dignity.
Ready to take control of your credit and rebuild your financial future? Check your latest credit report on PebbleScore and identify the loan you have defaulted. Create a payment on the PebbleScore app and begin to service your loans with the aim of clearing your BVN from the blacklist.