Every person is unique, but when you face a challenge like loan default, you are never alone. Countless men and womenhave faced the exact same problem and have survived and thrived. The following guide is designed to help you navigate your journey with the best information and resources that helped other survivors when they faced the same challenge.
TSC has scoured the Internet and assembled the links to the very best loan default resources: articles, forums and tools that can help you make better decisions and take action to overcome the range of financial, emotional and other challenges you may face.
As you'll see, we always welcome your ideas and suggestions to make this Guide to Loan Default even more helpful to survivors like you.
A number of the links provided lead to sites offering commercial services. These links are given for informational purposes only and do not constitute an endorsement of the companies or any services advertised on their sites. Should you consider using any of these companies or their services, please scrutinize them carefully.
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Survivors Say: Best Resources for Coping with Defaulting on a Loan
- The Simple Dollar: The Basics of Dealing with a Loan Default
- Federal Reserve Board: Putting Your Home on the Loan Line is Risky Business
- My Money: Borrow Smart! Don't Be a Victim!
The Big Picture
If you find yourself in the position of defaulting on a loan, you are far from alone. Famous people have done it, large corporations and even nations have done it.
About: Banking/Loans - More Default on Loan Payments
To default simply means failing to live up to the terms of an agreement. Most loan defaults occur when borrowers miss payments, but even making late payments could be considered a default. Failing to meet any of the other terms of the debt contract could also put a loan into default, such as failing to maintain a property used to secure a loan so that it declined in value, or not carrying adequate insurance.
Nolo: Legal Definition - Default
Defaulting on a loan is a serious business. It could potentially affect your credit rating for years to come, making it more difficult for you to secure loans and paying higher interest rates when you do. In some cases, it could put other outstanding loans into default as well, even though you’ve never violated terms of any of those other agreements.
Rate Empire: Loan Default
What Happens When You Default
The first thing you can expect is that the lender will contact you. Most defaults can be cleared up by simply making up the missing payments. If you still fail to pay, however, your creditor will begin to doubt your willingness, or ability, to repay the loan. At that point the creditor may demand payment in full of the outstanding balance. The creditor may sell off the loan to a collection agency, which will then mount a campaign to pressure you into repaying the debt. This will add collection costs to the amount of your debt, which has also been steadily increasing as interest charges mount up. In the end, creditors may take legal steps to seize your wages or property that could be sold to cover the debt.
MD Bankruptcy Law: What to Do if a Bill Collector Crosses the Line
Your Survivor Experience
It’s to your benefit to resolve the matter as quickly as possible. As time passes, your creditor will take more stringent steps to collect his money. Your best strategy is to restore the original agreement or negotiate a new one before things progress too far. If you simply make payments you may have missed, a creditor will often simply choose to ignore the default and carry on as before.
Renegotiation
If you cannot meet the payments required by the original contract, contact the lender and see if he would be willing to lower them. Often this means extending the term of the loan, which means, ultimately, you will be paying more out of pocket.
- Credit Info Center: Settling Your Debts
- Credit Info Center: Negotiating with Original Creditors
- Loan Safe
- The New York Times: Silence of the Lenders - Is Anyone Listening?
Be Cautious. Always seek financial advice from reliable sources.
Federal Deposit Insurance Corporation: FDIC Consumer News
Be very wary of advice offered by firms in the business of credit repair, debt consolidation loans, and negotiating with creditors. Many predators specialize in victimizing people in financial trouble. They know such people are worried and distressed and likely to grasp at any solution that promises relief without looking it over carefully.
Associated Content: Avoiding Foreclosure Scams
Be alert for these potential dangers when seeking to renegotiate a loan.
Rate Empire: Abusive or Unfair Lending Practices
Deal only with reputable financial institutions and have a lawyer you trust examine any legal document or loan agreement you plan to sign. The lawyer’s fees may seem expensive, but that can literally save you thousands of dollars, and important assets like your home.
If you’ve been victimized by fraud, you can find some resources here:
Federal Trade Commission: Protecting America's Consumers
Your World
Financial problems can bring with them a host of emotional problems. Depression and anxiety brought on by worry over debt can take a heavy toll on family life. When a financial crisis develops the impact can be overwhelming: bill collectors call, possessions get repossessed, or you may be facing legal actions related to your debt. It’s easy to develop a feeling of hopelessness. Negative emotions, however, are truly a luxury you cannot afford. Only clear thinking can help you get out of this mess. Keep in mind that you’ll eventually get past these financial problems, and beyond them lies a new and better life.
Learn more stress and how to deal with it.
eHealth MD: What Causes Stress?
Loan Default Myths
- A credit repair company can remove negative information from my credit report and fix my bad credit rating.
- I don’t have to worry about repaying my student loan, I’ll just declare bankruptcy.
- If I declare bankruptcy, I’ll never be able to get a loan again.
- If I declare bankruptcy, I’ll lose everything.
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