What Happens if You Don’t Pay Back a Loan?

Woman holding open empty walletSometimes life throws you curve balls that will leave money tighter than expected. If you find yourself in this position, you may be wondering, “what happens if you don’t pay back a loan?” Today we will explore the potential consequences of skipping your loan payments, as well as steps you can take to mitigate these outcomes.

Potential Outcomes of Not Paying a Loan

Depending on the type and parameters of your loan, there are a few things that can happen if you stop payment:

  • Collections: Usually after 60 days of no payments, your loan will be considered in default, and many lenders will send the loan to collections. At this step, you can expect to start receiving calls from the collection agency who will attempt to recoup the money.
  • Credit Score Decreases: Once in collections, you will see a negative impact on your credit score.
  • Bank Withdrawals: Some loan agreements allow lenders to begin bank withdrawals if payments are missed.
  • Lawsuit: After 180 days there is the potential for a lawsuit, though some collection agencies may go a different route completely and contact you to settle for less.

What To Do if You Can’t Pay Your Bills

While some of these things may sound scary, there are steps you can take to avoid these repercussions:

  • Talk to Your Lender: While each lender is different, many would rather work with a borrower and know they will get their money returned. Contact your Michigan lender and explain your situation to see if there is anything they can do to defer your car payment.
  • Consider a Personal Loan: You can use a personal loan to consolidate credit card yourself or, depending on interest rates, secure a lower interest rate and more manageable payments.
  • Seek Advice: Contact a nonprofit credit counselor or bankruptcy attorney to discuss your options.

Contact Xpress Cash For Loan Advice

For more tips on how to pay off debt or exit a title loan, or information about receiving a personal loan, contact us at Xpress Cash today!