What Might Happen If You Don’t Make Your Personal Loan PaymentsIt is very easy for the average person to get a personal loan to get them out of a bad financial situation, but it isn’t always easy to make those required monthly payments on time, no matter how good your intentions may be. Sure, when you got your loan, you had every intention of making each and every payment in full and on time, but now that something has happened, you have lost your job, or you have gotten married, etc., those payments are getting harder and harder to come by. You need to pay your utility bills, mortgage payments, credit card payments, student loan payments, car payments, and insurance installments, and it is quite easy to put your personal loan on the back burner, or to ignore it altogether when these situations occur. But, you would be surprised at the legal remedies lenders have available to them when it comes to collecting the money that you owe them. First off, you should know that if money starts to get really tight, you should talk to your personal loan lender, and all of your creditors, and let them know what is going on, how long you expect the hardship to last, and what you are doing to rectify the situation. In most instances, your creditors would much rather try to work out a more suitable arrangement with you, than to try to go through the collections process, which costs them time and money they don’t want to spend. You may even be allowed to sign a new loan contract, allowing you to defer a few payments, or lower your minimum payment amount, making it possible for you to stretch your budget farther. If you have over- extended yourself, you may be able to refinance your loan, taking out enough money to payoff some of the more bothersome debts you have, saving you money both now, and in the long term in interest rates and fees, especially if your problem is with credit card debts. There are many options available to you, even in financial hardship. That being said talk with your creditors, don’t try to avoid them, and see what you might be able to work out, in the end you will save a lot of money, and maybe your credit score as well. Each lender follows their own collection guidelines, but is still bound by both state and federal laws. If you have a secured personal loan debt, you should make every effort to make your payments or a satisfactory arrangement, or be prepared to lose your collateral, it is just that simple. That is why the collateral is there, so that if you don’t pay, the lender doesn’t lose a lot of money to a bad debt. Likewise, if you had to have someone co-sign for you on your personal loan, you should know that if you don’t make the payments, you are not only ruining your own credit, but theirs as well. The lender will not only come after you, but also the co-signer. They don’t really care how they get their money, or from which party, as long as they get it. If your co-signer can’t make the payments, and you refuse to handle the situation, then in all likelihood, you both will end up being hauled into court, together. At the very least, you can expect the account to be turned over to an outside office for collection, usually a not- so-nice collection agency, that will put massive amounts of pressure on both parties until payments are made, not only for the balance remaining, but any fees the lender feels like assessing as well. You will have to pay your own legal fees, and yes, even the poor soul who co-signed for you, will also need legal representation. You will also be required to pay court costs, which can be quite expensive as well. The actions of the court vary greatly, some will require that you pay an obscene amount of money each month, or be placed into legal custody, while others will garnish your wages, which will make it that much harder for you to pay your other bills and living expenses. They will usually garnish or demand that you pay at least twice the amount of your normal monthly payment every month, which can put you in tremendous financial strain. Some people make the mistake of thinking that if their personal loan is a secured loan, that once the lender takes possession of the collateral, they are free from the debt, but that rarely is the case. There will usually be a balance owing, meaning that collection efforts will continue until the remaining balance is paid in full. So not only have you lost your collateral, you are being hounded by collections agents for the remainder of the balance on the loan. Again, this could end up in court, or with garnished wages, even on a small balance. There are some ways to keep all of this from happening to you, the most obvious being to pay your monthly payments on time. When you do take out a personal loan, make certain that you only borrow just enough money to see you through, and never borrow more than you can comfortably repay. If you get extra money, such as income tax refunds, etc., think about putting it towards your personal loan balance, so that you can get your debt paid down as quickly as possible. That way, if something unexpected does occur, such as job loss, or illness, you won’t have as much outstanding debt to try and juggle. Lenders don’t want to use the court system to get their money, due to the fees, and the time involved. But, in the end, they will get their money, one way or the other, and you should be very aware of that if you have personal loan debt. |
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