Defaulting on loans can have terrible consequences, such as having the debt passed to collection agencies or being taken to court, so it’s important not to do it. You do, however, have options. You can file a consumer proposal, get a debt consolidation loan, or set up a repayment holiday.
What Happens if You Miss a Loan Payment?
A loan repayment default implies you skipped the monthly repayments. Defaulting on your loan can have serious consequences, so do your homework and get debt advice when you anticipate an issue.
Subsequently, lenders appreciate it if you notify them as soon as possible rather than allowing your account to slip into arrears.
What If I Don’t Pay Back A Personal Loan?
If you don’t pay your debts or default on your monthly payments, the lender can take legal action against you or hand you over to a debt collection agency. This will have a long-term impact on your credit record, making it less likely that you will be accepted for other types of credit.
If you can’t afford your loan payments, you should seek debt counseling or contact your lender. Then, you can request a payment freeze or repayment assistance. Lenders prefer that you inform them as soon as you have a problem since it is much simpler to resolve a loan default early on.
What Happens if You Can’t Pay a Single Payment on a Loan?
If it is the first time this has happened to you, you will usually get a letter from your loan provider informing you that you must make up the missing payment. You must continue to make timely payments, or they will take action against you.
If you have a secured loan or a car lease, the loan company may threaten to seize your house or vehicle to recoup the charges. If you have financial difficulties, you should contact a debt counseling organization for assistance. They will examine your whole financial situation and assist you in sorting out your money and debt commitments.
Is Your Credit Score Affected?
It does affect your credit rating if you don’t repay the loans. Your credit score will be checked if another lender approves or rejects your application. If you missed payments this will show up on your credit report. Which will determine whether your loan will be approved.
How a default can become a County Court Judgement (CCJ)?
When a client defaults and cannot repay the loans the court may hear your case. This is when the lender wants the judicial system to demand your payment, and the court hears the case. The court will then decide whether you owe anything.
What You Can Do
Contact your lender or a debt charity and take action. Consequently, if you have a loan secured by a vehicle or your house, it may be repossessed to recoup the debt. However, if you still can’t pay your bills, you may have to file for bankruptcy. Which may hurt your chances of getting a loan in the future.
An Individual Voluntary Arrangement (IVA) – is one possibility for avoiding bankruptcy. An IVA is a contract between a loan provider and a client. In which the loan provider agrees to freeze interest and reduce the total amount owed. Which will still hurt your credit score, but it is less stigmatizing than bankruptcy.
If you’re having trouble paying your loans, there’s help and guidance available. The sooner you get assistance, the better.