Consequences For Not Paying A Loan
Defaulting Loan Payments – What are the consequences?
Unsecured loans are labeled as ‘high risk’ loan types by lenders since there is no collateral tied to the loan. If you are unable to make your payments and end up defaulting on your loan, the lender is not protected financially. However, you still will be faced with consequence for defaulting.
Borrower Receives Notice of Default
Your contract will state the terms of when your loan will be in default. Your lender will send written notice that you are in default, and you will have a certain amount of time to respond to this notice. If you have lost a job, suffered personal tragedy, or cannot pay for a specific reason, you may consider declaring loan hardship. A hardship will allow you to restructure most debts so you can afford the payments. Lenders may be willing to grant leniency while you deal with these issues. You will still have to pay the full amount of the loan but it will be over a longer period of time. Otherwise, you need to take action immediately to prevent the default from hitting your credit report.