What Are The Potential Repercussions For Missing A debt Payment?


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When it comes to debt payments, missing one can seem like a disaster. However, repercussions for missed debt payments can generally depend on your previous payment history, and how many you have missed lately. Read on below to find out more.

What happens if you miss a payment?

If you think that you might miss a repayment, you should your lender as soon as you can. If possible, call them before the repayment is due to discuss your options, and explain your financial circumstances. You can still do this after you’ve already missed a repayment, but doing it beforehand shows that you are trying to find a solution as soon as possible, and may be seen as a positive sign by your lender.

Your lender may then assess your situation and ask you:

  • Why you will miss a repayment
  • How you plan to pay it back
  • If they can help you to get back on track with your repayments

Missing one debt payment probably not mean foreclosure. For that to happen, you will usually have to miss at least a couple of months’ worth of repayments, and also not be communicating with your lender.

However, that does not mean that one missed payment won’t have a negative impact on you. In some cases, missing a payment can mean that your credit score loses points. In addition, a late fee will generally be added on to the payment you owe.

What if you miss more than one repayment?

If you miss more than one repayment you, there are still some things you can do:

  • Make a repayment arrangement– Call your lender for financial guidance and request to work out a new budget.
  • Contact your lender- it could benefit you to ask to be transferred to the financial hardship team, should your lender have one. Explain to them your current repayment arrangement and ask for the term of the loan to be extended. Alternatively, you could write a letter requesting financial hardship consideration and attach all the required documentation for your lender to consider.
  • Complete a Statement of Financial Position –This allows your lender to see whether or not you can afford your home loan repayments.
  • Change loan terms –If repayments are a short term issue, your lender may be able to help by changing the terms of the loan.
  • Downsize to a cheaper home – If repayments are no longer affordable, you may be able to consider moving to a more affordable debt while renting out your property.
  • Talk to the ombudsman –If you aren’t completely satisfied with your lender’s decision, it’s possible to contact the Australian Financial Complaints Authority.

*Disclaimer: This article contains general comments and recommendations only. It is not intended to be and should not be construed as legal advice. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action, you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs.

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