What is defaulted loan?
When taking out a loan or a loan with a lender, there will be a repayment plan put in place. The maturity details when the money is to be paid back to the lender, usually monthly or weekly. If you miss these payments, then the lender can class the credit or loan as a defaulted loan.
A defaulted loan status can have serious consequences for your chance of getting credit in the future. It can give you a negative credit history and can lower your credit rating and score. Financial companies use these ratings to assess whether you will be good enough risk to justify lending them credit.
There are a number of options available to you if you have received a defaulted loan notification. Don’t just ignore these messages
The longer you leave them, the worse the situation will be. In some cases, withdrawal of goods may occur, and in some countries, non-payment of debt may be an affordable offense. Think of a defaulted loan notice as a warning that it is not too late to change the situation.
When you receive a defaulted loan charge, the lender may allow you a repayment plan. You should contact your lender and negotiate a time scale when the arrears on your debt can be paid off. You should also negotiate a refund amount that you can reasonably live with. It is not in your lender’s best interest to get lawsuits as this will cost them time and money to pursue.
Another option to pursue when receiving a defaulted loan announcement is to seek advice from a debt counseling service. They will be able to contact lenders for you and arrange a repayment plan that may include a stop for interest payments at a time. They may also have the opportunity to negotiate on your behalf a lower refund for your debts.
Debt counseling can also advise on consolidation.
If you have a number of debts that you find difficult to repay, this may be an option for you. You will need to give that debt counseling all your financial information and they will assess whether consolidation is an option for you. You will pay the advice a fixed amount each month and they will pay your debt to you, usually after negotiating a lower term for the repayment.
A defaulted loan notice should not be ignored. It should be considered as the first step in overcoming any debt problems you may have. A defaulted loan may have already damaged your credit score, but if maturity is met, the situation may be reversed.