What happens if I default on an unsecured personal loan?
I used tο bе аbƖе tο afford іt аחԁ now I јυѕt саח′t mаkе monthly payments anymore. Wһаt happens іf I default οח аח unsecured personal loan? Iѕ tһеrе anything tһеу саח ԁο οr ɡο аftеr besides bug mе аחԁ rυіח mу credit score fοr 7 years?
6 Responses to “What happens if I default on an unsecured personal loan?”
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Court judgment and wage/bank account garnishment.
They will send it to collections. There it can double or triple in cost. That could be 2 years from now so add two to that 7.
In that time you will have:
Trouble finding a job. Stats show that people with good ratings make better workers.
Pay more for car insurance
Not be able to get financing for a car
Not be able to get a cell phone
Not be able to get an apartment since landlords refuse to rent to people with bad credit.
Not be able to get a descent mortgage in case you get relocated with your job.
Then after those years have passed. It can take another year just to clear this with your credit reports. That takes time.
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They can sue you and if they win a judgment (which they probably will as you seem to indicate that you owe the the money) and then they can garnish your wages and attack your bank accounts. You borrowed the money and promised to pay them back. They will come after you, just like you would go after someone who screwed you out of money.
They will or can take you to court and seek damages. They may be able to garnish wages etc. It usually depends on a lot of incidentals. WHat the loan is for is a big factor. If it is for a car or something than it is secured, but I imagine you know that.
It used to be… that they sick a collection agency after you which would hound you but effectively had little power to make you pay.
Lately… I see them going the extra mile and actually getting a judgment against you and if you think “oh well” I don’t own a thing, what could they possibly get? Think again. One of my friends just got his checking account and savings account completely raided.
They took everything plus now his checking account is overdrawn because pending checks that he wrote are bouncing.
He knew they had a judgment… but didn’t realize that his bank accounts are considered “property”.
The irony of the story? The credit card account was opened years ago by his now Ex-wife who forged his name on the application and didn’t tell him about the credit card. And since the Ex doesn’t even have a bank account… they went after him after she ran up the card and didn’t make any payments.
There is a whole new side to the Credit Card Crunch… the banks aren’t very forgiving anymore and don’t have the necessary cash cushion to just write off the defaulted accounts.
And no… since they were married at the time she opened the account he has no chance to proof that he didn’t sign for it.
They can, and probably will sue. They WILL win a judgment. They can then use the judgment to garnish wages in most states. They can also secure a lien against nearly anything you own.