What Happens If I Default on a Personal Loan?

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When is a personal loan in default?
Payment timing | Potential consequences |
---|---|
Immediately after you miss a payment. | Your loan is considered delinquent and you might owe late fees, but your missed payment probably won’t be reported to the credit bureaus yet. |
After 30 days. | Your lender may report your loan as delinquent to the credit bureaus. |
After 90 days. | Your lender will likely change your loan status from delinquent to default. |
After 120 to 180 days. | Your lender may “charge off” your loan, which means it no longer keeps it on its books, and transfer the account to a debt collector. A new collections account may appear on your credit report, which negatively affects your credit score. |
Personal loan default consequences
Lender programs to help you avoid default
Lender | Hardship options |
---|---|
Best Egg | Loan extensions, short-term and long-term reduced payment plans. |
LendingClub | Short-term reduced payments, interest-only payments or extended loan terms if you’re experiencing temporary hardship. APR reduction and term extensions if you’re facing permanent hardship. |
Prosper | Payment reduction, extended loan terms. |
Reach Financial | Payment deferral for up to 90 days if you can document financial hardship, options to split up payments over time or change payment schedule. |
SoFi | Forbearance if you’ve been laid off and you have a loan in good standing that you’ve had for at least nine months. |
What to do if you face loan default
Article sources
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