A lot of people can feel that it is quite challenging to get their consolidation loan payments done on time. It might be so because they have not done their budgets properly or since they have become faced with some unexpected bills like medical bills and other expenses. If you default on debt consolidation loans, then it can get quite damaging for your finances. However, there are certain actions which you would be able to take in order to stall court proceedings because of non-payments for your loan. In this article, you shall learn about some methods by which you can deal with such unpleasant situations as missing a monthly payment for your debt consolidation loan.
What can happen if you miss out on making your payments on time?
Making a late loan repayment on any debt consolidation loans will have a lot of negative consequences for you. You would not only get charged a late payment fee but your rate of interest on your loan will also get increases, and this will enhance the monthly amount that you have to pay. This is the reason why so many borrowers often deem it quite difficult to follow up with the monthly payments they have to make. But, there are some ways to help you out of this too.
Should you contact your creditor immediately?
This is arguably the initial thing which you should be trying in case you make a late payment, and that contacts your lender. You must contact them prior to them contacting you for a payment which is felt to be late. They will allow you a certain grace period and will work for your benefit by trying to waive off your late fine as well as the rise in your interest rate. Then again, it is also possible that they do not even negotiate anything with you at all. However, it will not hurt you to at least try once.
A lot of lenders are willing to give you a 15 day or even a full month’s grace tenure for your late loan payment. However, there would be some lenders who will not offer you absolutely any no grace time. In case you go two months or 60 days straight without having made any payments, you can get charged some extra fees, and your rate of interest will also have increased. When you 90 days without making any payments, you will have your account get officially listed as a defaulter, and you might start to get even calls from your lender.
Debt collections departments and agencies
In case you do not contact your lender or make any payments even after four months or 120 days, your lender will be sending your accounts to a special department for debt collections in order to get the due amount. You might start getting a lot of phone calls about the loan default if your account gets passed over to the collections department. In case there is no consensus or agreement, or you begin to start paying back some parts of your loan you will risk getting your account sent to a debt collection lawyer.
You must keep on making as many payments as possible in order to save your loan, although it might have still defaulted. When the lender keeps receiving from you some money, they might yet still feel like working for you and help you in order to save your loan amount from getting listed officially as a default. In the event that you get taken over to court because of the non-payment of your loans, you shall not only be forced to repay your loan, but at the same time, you may also be charged for all the extra court expenses. The courts may also put liens on your property, and that means you would be responsible if you were to sell your residential property in order to repay your debts. Hence, you must contact your lender immediately and quickly if you feel that you would not be able to repay your loans on time or you are highly in risk of missing the monthly payment that you have to make. Your account can be with collections agencies, but you shall still be able to negotiate something and then make new payment plans which you will be able to afford. You may be paying higher interest rates now, but that would be better than visiting courts and paying extra costs.
You must reduce your daily expenses
You would have to analyze all your finances closely in order to check where it is possible to make few quick reductions which can allow you to save some money so that you can make your payments on time. You should consider adjusting your present lifestyle till you can manage to afford to live off only your income and not making use of credit cards.
Consider a debt settlement plan
When your debt consolidation loan defaults, you might want to check out a debt settlement company for helping you resolve all your financial problems. There are a lot of non-profit organizations who will offer you with credit counseling and services for debt management. These organizations will help you to avoid getting dragged to court for your non-payment of outstanding dues, and they will negotiate with the lenders for you.
For more information on debt consolidation loan, like when you can apply for such loans and what are the eligibility criteria and how should you plan on repaying this loan, you must contact your financial advisor for some good counseling.
It is a dangerous affair to get caught in debt traps and especially with debt consolidation loans. Always try to make the payments which you owe on time. Reduce your expenses, plan your spending and this will help you stay off the debt radar. Hopefully, the information mentioned in this article will have helped you in this regard.