Whether you’re in need of a vacation, need to pay medical bills, require automotive maintenance, or have an unexpected household emergency, sometimes that much-needed cash is not available. An unsecured loan is a great way to take care of these temporary expenses. Although you go into your loan with the best intentions of making on-time payments and meeting all the terms and conditions of that loan, life doesn’t always go according to plan.

If you go through an unforeseen job loss, or can’t work due to illness/injury, you may find yourself struggling to make your payments on time. A delinquent payment or two isn’t good, in most cases, they will incur late fees, may increase your interest rate, and will most certainly hurt your credit score if they’re delayed long enough.

Delinquency can also reduce your credit score depending on how late your payment is. If you’re more than 30 days late, it will be reported to the credit bureaus, and your credit score might take a big hit. Make sure you check your credit score on a regular basis to stay up to stay aware of any updates.

After 30-day delinquency in loan payments, depending on your lender, it’s likely you will be in default. which will reduce your credit score even further and put your account into collections.

A default can remain visible on your credit report for up to seven years, which means your credit score will remain low and have a negative effect on your ability to get approved for new credit lines in the future.

Once your account goes into collections, late fees will still be added and your increased interest rate will also be adding to the debt you owe. Some loan companies have in-house collection departments, but others will sell off your debt to companies that specialize in collections.

Once you’ve made it to collections, you’ll be getting calls and letters (all within fair debt collection laws for reputable companies), and if those go unanswered, you’ll likely find yourself with a potential lawsuit and court date on your hands.

If your debt collection goes that far, you may be faced with wage garnishment. And while secured loans would mean repossession, you can still face similar consequences with unsecured loan default. The court can seize or put liens on assets or property.

• Late fees
• Increased interest rates
• Big hit to credit score
• Going into collections
• A lawsuit and court fees
• Wage garnishment
• Seized assets/property
• ding for up to seven years

Of course, none of the information above is meant to scare you out of getting an unsecured loan. In fact, unsecured loans are often the easiest way to take care of life’s unexpected expenses. And just because you’ve stumbled or have had a rough month doesn’t mean you have to face default.

Lenders know that life is unpredictable—this is why unsecured loans are available in the first place. If you know you’re going to be late on a payment or possibly miss a payment, don’t just let it happen; Contact your lender! If we happen to be your lender, give us a call! We are always here to help our clients succeed, and avoid any detrimental impacts a stumble could have.

The moment you realize you might be late or miss a payment, get in touch with your lender to see if they offer any short-term relief. Depending on the lending company, you may be given the option of deferred payments to buy you some time while you get back on track.

Deferred payments can give you the much-needed relief for a month or two while extending the overall length of your payback by simply adding that time to the end of your agreement. Failing to do that and missing a payment is guaranteed to damage your credit score, incur fees, and also leave you owing more money in the long run due to increased rates.

Attempting to make arrangements with a lender won’t have a negative effect, but making those arrangements can save you a lot of stress and money. Plus, you can ultimately save yourself from collections, default, and a lawsuit with associated court fees.

Now that you know what will happen if you go into default on an unsecured loan, as well as the steps to avoid it, you’ll be better prepared for any of life’s curveballs that may come your way.

If you have an unexpected medical expense your insurance won’t cover, a car or truck that needs repair so you can commute to work, an emergency family trip, or any other urgent expenses you simply don’t have available funds for, a short-term unsecured loan may be your answer.

1. Check your credit score
2. Decide how much you need to borrow
3. Apply for your personal loan from Helix
4. Wait a few seconds for your decision
5. Go over your terms and conditions to understand your payback schedule
6. Receive your money within one business day
7. Get back to the more enjoyable things in life