Missing payments has consequences. Here's what to expect:
Immediate Consequences:
First Missed Payment:
- ●Late fee (typically 5% or $25-50)
- ●Lender contact (calls, emails)
- ●NSF fee if ACH fails
- ●Payment reattempted
Multiple Missed Payments:
- ●Default interest rate may apply
- ●More aggressive collection
- ●Potential acceleration of loan
- ●Credit reporting (after 30+ days)
By Product Type:
MCA:
- ●Daily ACH continues to attempt
- ●Multiple NSF fees possible
- ●May trigger default clause
- ●UCC lien enforcement possible
- ●Personal guarantee pursued
Term Loan:
- ●Late fees accumulate
- ●Default interest kicks in
- ●Reported to credit bureaus
- ●Loan may be accelerated (full amount due)
- ●Collateral at risk
Line of Credit:
- ●Late fees
- ●Line may be frozen
- ●Interest continues accruing
- ●May become term loan (no more draws)
Legal Consequences:
- ●UCC filing allows asset seizure
- ●Confession of judgment (if in contract)
- ●Personal guarantee enforced
- ●Potential lawsuit
What to Do BEFORE You Miss:
- ●
Communicate Early Contact lender BEFORE you miss. Many will work with you.
- ●
Request Modification Options may include:
- ●Payment deferral
- ●Reduced payment temporarily
- ●Extended term
- ●Interest-only period
- ●Explore Options
- ●Refinance to lower payment
- ●Consolidate multiple debts
- ●Negotiate settlement (last resort)
Protecting Yourself:
- ●Read default clauses before signing
- ●Understand personal guarantee implications
- ●Know what collateral is at risk
- ●Communicate early and often