In adulthood, one of your goals is to be financially sensible, and that, of course, means making payments when they are due. Unfortunately, life doesn’t always make it easy for everyone. So, what happens if you miss a payment? What if you miss multiple in a row?
Missing Too Many Payments and Swimming in Debt?
Before going into what actually happens when you miss a debt payment, it’s worth remembering that missing too many payments can lead to real financial consequences. That doesn’t mean there’s no end in sight, though.
If you’re reading this as someone who has already missed too many payments and debt has overshadowed your entire financial health, there are options like Debt Consolidation from Freedom Debt Relief. This is a custom plan to help you pay back your debts faster at a lower rate overall. You make a deposit into a dedicated account, and as your deposit grows, the experts negotiate terms to come up with a custom plan for the best debt savings possible. If you’re struck right now, it’s a route out.
So, what if you just miss one or two payments? What are the consequences? Keep reading to learn more.
A General Timeline of Missed Payments
Whatever type of payment you are missing, here’s what to expect at each stage.
- Within the first month: If you’ve missed a single payment within 29 days of the payment being due, your account will be classed as delinquent. However, it’s still the early days, so rest assured it won’t be reported to credit bureaus such as Experian, meaning it won’t affect your credit rating. There’s a chance you’ll get a late fee.
- 30+ days: If you’ve missed payments for over 30 days, the lender will report it to credit bureaus, so your credit score will take a hit. You may experience more late fees.
- 90+ days: After 90 days, the lending company will usually mark your account as in default. A repossession process may also occur depending on the loan.
- 120+ days: Often, at this stage, the lender writes the account off as a loss and sells the debt to a third-party agency. You will then owe this collection agency, and you’ll take more of a credit score hit.
What About Specific Debt Types?
It’s worth noting that different types of debt come with different consequences.
- Credit card missed payments: If you fail to make a payment on your credit card, the chances are the credit card provider will freeze your account immediately (or at least quickly) and add on charges.
- Student loan missed payments: For federal loans like student loans, missed payments after 270 leads to a default. This means the government can take money from your wages and tax refunds.
- Auto loan missed payments: After 90 days of missed payments, the lender can start the repossession process.
- Mortgage missed payments: There’s a grace period of up to 15 days. From there, there’s a late fee. After 30 days, your account goes into default. After 120 days, the lender will likely initiate foreclosure proceedings, which will lead to the property being auctioned and you getting evicted from the property.
As you can see, missing payments never lead to anything good. Your credit score will be harmed, and you could even lose your car or home. If you are struggling with payments, it’s best to speak to your lenders as soon as possible to work out a deal.
