Understanding Unserviceability in Debt and Loans

Unserviceability refers to a situation where a debt or loan cannot be repaid due to the borrower's financial circumstances. This can happen when the borrower experiences a significant decline in income or assets, making it impossible for them to meet their debt obligations.

In this case, the lender may declare the loan unserviceable and request that the borrower provide additional information or documentation to support their claim. The lender may also require the borrower to undergo a financial review or audit to determine the extent of their financial difficulties and the likelihood of recovery.

If the loan is deemed unserviceable, the lender may choose to write off the debt or restructure the loan terms to make it more manageable for the borrower. However, this decision will depend on the specific circumstances of the loan and the lender's policies and procedures.