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Posts tagged with: debt repayment

Loan Defaults and 5 Ways to Get Out of It

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In layman’s term, loan defaults are simply debt that you weren’t able to pay. Loan defaults apply to any type of loan – car, home, student, SBA, 401K, payday loans, and the most common – credit cards. Defaults will be incurred once a consumer fails to pay the borrowed amount to their lender, and once a certain period of time has elapsed, your debt will be recorded and will forever be a part of your credit history – which is what you want to avoid. Credit history can be used to formulate a consumer’s credit score, which can negatively affect your future loans.

So, how do you get rid or get out of loan defaults? There are ways, for sure, and you can abide by these tips to make sure you do not incur loan defaults:

Make a budget and stick to it

Never go out of your budget as this can cost you your good credit score, a decent car, and the good relationship with your lender. Once you’ve set a budget, stick to it and make damn sure not to overspend – as you definitely will be sorry for it soon enough.

Choose a lender or can finance company that you can trust

You will be working with them for the next couple of years, so take the time to choose one wisely. Every country has their top lender, Bank of America (USA), Sainsbury’s Bank (UK), Alpha Finance (AU), etc. Whichever lender you choose, be sure to go with the best in the industry. Not just because they can provide car finance with affordable repayments, but also they have excellent customer service that will remind you whenever a payment is due so you can avoid defaults.

Contact your lender ASAP

Anything can be resolved through constant communication. If you know that you cannot pay your loan any further, or you can but you are going to be a bit late, then it’s best to talk it out with your lender. Ask if you have any other option, and if there is any way you can reduce the penalty or default. Ask nicely and surely, you will get an answer that you want to hear.

Consider looking into a debt repayment agency

If you know that you are going to have problems with paying your loans, then don’t sit around and just wait for your lender to chase you down the road – instead, talk to them and a debt repayment agency. Consumer credit agencies will work with you and your lender to come up with alternative payment plans. All you have to do is have your repayment plan approved by the lender, put the money into an account through a debt repayment agency, and the agency will be the one to make the payments for the consumer.

Agree to have your car repossessed

If you do not want to incur any more debts and you have no other options left, then it’s better to have your car repossessed by the lender, rather than having loan defaults that will last for at least 7 years on your credit history. The downside to this is that you will lose all of the previous payments that you have made, but hey, at least, you do not have a bad credit history to your name.

Good luck with your loans, and make sure to follow this list to avoid being caught in an unpayable debt!


Ashley’s August 2016 Debt Update

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Hi friends!

I hope everyone is having a relaxing, laid back Labor Day holiday! We’re still in Texas (we drive back to Tucson tomorrow), so I’m just peeking in with a real quick Debt Update from the month of August.

Here it is:

PlaceCurrent BalanceAPRLast Payment MadeLast Payment DateOriginal debt, March 2014
Navient$653716.55%$829August$74218
ACS Student Loans$85966.55%$20August$8215
Balance Transfer Student Loan #2$58500% (through April 2017)$500August$7650
Medical Bills$57360%$25August$9000
Balance Transfer student loan #1$00%-Paid off in March 2016$5937
PenFed Car Loan$02.49%-Paid off in January 2016$24040
License Fees$02.5%-Paid off in April 2015$5808
BoA CC$07.24%-Paid off in June 2014$2220
Mattress Firm$00%-Paid off in May 2014$1381
Wells Fargo CC$013.65%-Paid off in May 2014$7697
Capital One CC$017.9%-Paid off in March 2014$413
Totals$85,553 (July balance = 86,518)$1374Starting Debt = $145,472

This was a relatively small debt payment (particularly in comparison to last month’s monstrous debt payment), but I’d expected that given that August is a little bit lower-income month for us (I do not get paid from my part-time job at all in August). Even so, we made some good progress over and above minimum debt payment obligations. We just keep chip-chip-chipping away at our debt totals.

As another exciting piece of information – we think we found “the one” (house). We saw it just before leaving town for the Labor Day weekend and called our realtor to put in an offer while we were on the road (we signed via docusign using my phone’s hotspot to get internet on our computer). Fingers crossed!!!

After house stuff is behind us we plan to make some really concrete mini-goals for the student loan debt. I’ve been hesitant to make any mini-goals (aside from our general 2016 goals) because it feels like so much has been up in the air with the house hunt and trying to just stockpile as much cash as possible for a down payment and emergency fund, etc.

I’ll keep everyone updates as house progress continues. : )

Have a great long weekend!


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