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!

For more valuable information, please visit www.prudentcreditrepair.ca

What happens When You Default on a Loan

A default happens when a debtor is unwilling or unable to pay back a loan in which they are required to pay back. This can include anything from a mortgage, auto loan, credit card and even promissory notes.

There are some debts that you may turn your back on and not see any consequence such as a small subscription to a magazine that you got locked into when you signed up for some service. On the other hand there are debts that if you turn your back on can lead you into a difficult financial situation. You may hear stories of people who have gotten away with debt for a couple of years but make no mistake, it will catch up to you.

Loan debts can occur easily. Monthly payments on loans usually start off affordable but this can turn very quickly. There are so many reasons that can contribute to the cause of personal debt problems such as deteriorating health or loss of employment.

What can happen if I default on my loan?

· Loan default will result in a bad credit rating. When this happens, other borrowing sources will become more expensive and more inaccessible.
· Missing monthly payments will incur further interest and penalties.
· Following a loan default, collection calls will consist of the odd call but will then turn into calls from a debt collection agency and they will aggressively pursue you in order to recover the debt.
· For bigger debt problems, you may have your wages garnished. Your employer will be legally obligated to take a portion (if not all) of your paycheque and send this amount to your creditor.
· You can face emotional distress. Feelings of anger and depression will start to surface and can affect your home life and mental stability.

Loan defaults are bad for you and bad for the economy. It’s always best to make your payments on time. If that is difficult, then ignoring the problem will not make it go away. It’s always best to deal with the problem face on to ensure that you have a brighter future.

For more valuable tips and information about managing money, visit www.prudentcreditrepair.ca

Need A Loan But Have Bad Credit?

There are thousands of Canadians with bad credit. Are you one of the many Canadians who have made some financial mistakes causing your credit rating to suffer? If so, don’t get discouraged. There was a time where one who had a bad credit score would have no options but currently there is a huge market for bad credit loans. Most banks and financial institutions will not loan money if you have a poor credit score, however, today there are other alternative lenders who will lend money to people with bad credit.

First and most important thing to remember is to be cautious of which lender you will borrow from. Once your credit rating is damaged, you’re considered a high risk and lenders will charge you a higher interest rate in return for them taking a chance on lending money to someone who could possibly not pay back the loan. This does not mean that you should borrow money without researching your best option though.

You may think the only way to borrow money is through a payday loan center. Payday loans give out fast and convenient loans but this comes with a great cost. You will be charged an extremely high interest rate as well as other charges and fees which could ultimately cause you bigger financial hardship. It’s extremely easy to get caught up in a payday loan spiral.

When you’re looking for a loan due to being a previous bankrupt and are having a hard time finding a decent interest rate, just need to rebuild your credit or need quick emergency funds, you’ll need a good plan of attack for borrowing. It’s strongly recommended that you choose a lender that can and will offer you a good interest rate and also help you rebuild your credit.

Cleaning up your credit rating is crucial. It represents your financial health and the risk you are to lenders. It can save you lots of money when purchasing a car, getting a mortgage, renting etc...so choose a lender that doesn’t just provide loans to people with bad credit histories but will go steps further and help you repair your credit by regularly reporting payments to Equifax.

For more information on loans, rebuilding your credit and more valuable information, visit www.prudentcreditrepair.ca