Legal Actions That Can Be Taken against You for Loan Non-Payment?
Loan non-payment is a big problem that many people are faced with in troubled economic times. Sometimes, the amount of money coming in is just not enough to pay all of the debts that you have. When you are laid off or unemployed and have loans you do not have the money for, you are under a tremendous amount of stress. Unfortunately, in a recession, this is a very common problem that many people experience. There are a few important consequences that you should be aware of.
When you do not pay your car loan payment, there are a few things that they can do to you. First, they will charge you a late fee for not making the payment. After a few months of not making the payment, they will try to contact you and fix the problem. If they cannot reach you or fix the problem, they will come and repossess the car. Your credit will be severely damaged and it will be difficult to get a loan afterwards as a result.
Student loans usually have the lowest interest rates around and provide flexible payments. If you do not pay them, they will never go away. Student loans are set up by the federal government. As a result, the government will never let them be charged off. They will stay with you until you pay them off, or die.
Even if you go through a bankruptcy, the student loan debt will not be eliminated. If you do not pay them, they can garnish your wages and take a good percentage of your paycheck. You will not be able to get income tax refunds until the debt is paid off as well. The longer the loans go unpaid, the higher the loan balances will get. They will keep adding late fees and raising the interest rate as you go. Therefore, paying your student loans should be one your top priorities.
Personal loans can be a little bit different because of the nature of the loan. They are usually just based on your credit and are therefore not secured by any particular piece of property. As a result, they cannot repossess anything like they can with an auto loan, or a mortgage. When you do not pay your personal loans, they can take legal action against you.
First, they will try to collect the debt through an internal collection department. Then they will usually turn it over to a collection agency that will attempt to collect the debt. If that does not work, they will sue you in civil court for the money. You may have a judgment against you, but it is very rare to go to jail as a result. However, your credit can be ruined and your wages can be garnished.