Defaulting On a Loan – The Dumps
Default, in the finance industry, happens when a debtor has not met their obligation according to a debt contract. This will occur when the debtor is either unwilling to pay their loan or they are not able to pay their loan.
When you default on a loan, it means you’re neglecting your financial responsibility. We are all aware of the reasons why someone would not be able to pay their loan. People lose their jobs or a sudden medical emergency may happen but whatever the reason may be, you should always communicate with your lender. Most lenders will work with you especially if your financial hardship is temporary.
Most of us have occasional late payments but when it evolves from a late payment to a missed payment to no payments, the debtor will suffer the consequences. The first thing that happens when you default on a loan is the organization will begin to contact you to get their money. It will start with friendly reminder calls or correspondence but as the default continues, they become more aggressive and the contact is more frequent.
Eventually your account will be turned over to a collection agency. This kind of action will begin to affect your credit. When this happens, it will be harder for the debtor to get other loans, it will increase your interest rates and sometimes may even affect your ability to get a job. It can even result in a repossession or foreclosure depending on the type of loan.
If you simply don’t have the money to pay, it still is best to be proactive. When you approach the situation in this manner, the lenders will peg you as a delinquent with no intention to pay and take their actions accordingly. If you are genuine and want to make the effort, then contacting your lender to create an easier payment schedule is more likely to happen or even having the interest rates reduced.
If you have already ignored the situation, it is never too late. Your credit will most likely already be damaged but the negotiation process is never off the table and there may still be a chance for damage repair.
Putting yourself in this situation can and will only lead you into a world of madness. You will be consumed by the stress of your finances, frustrated by the constant aggressive contact and the feeling of depression will arise and will only deepen. Take care of you and your financial health!
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