What happens When You Default on a Loan

A default happens when a debtor is unwilling or unable to pay back a loan in which they are required to pay back. This can include anything from a mortgage, auto loan, credit card and even promissory notes.

There are some debts that you may turn your back on and not see any consequence such as a small subscription to a magazine that you got locked into when you signed up for some service. On the other hand there are debts that if you turn your back on can lead you into a difficult financial situation. You may hear stories of people who have gotten away with debt for a couple of years but make no mistake, it will catch up to you.

Loan debts can occur easily. Monthly payments on loans usually start off affordable but this can turn very quickly. There are so many reasons that can contribute to the cause of personal debt problems such as deteriorating health or loss of employment.

What can happen if I default on my loan?

· Loan default will result in a bad credit rating. When this happens, other borrowing sources will become more expensive and more inaccessible.
· Missing monthly payments will incur further interest and penalties.
· Following a loan default, collection calls will consist of the odd call but will then turn into calls from a debt collection agency and they will aggressively pursue you in order to recover the debt.
· For bigger debt problems, you may have your wages garnished. Your employer will be legally obligated to take a portion (if not all) of your paycheque and send this amount to your creditor.
· You can face emotional distress. Feelings of anger and depression will start to surface and can affect your home life and mental stability.

Loan defaults are bad for you and bad for the economy. It’s always best to make your payments on time. If that is difficult, then ignoring the problem will not make it go away. It’s always best to deal with the problem face on to ensure that you have a brighter future.

For more valuable tips and information about managing money, visit www.prudentcreditrepair.ca

Being In Debt and the Effect It Can Have On You

Debt when used constructively allows us to build a future. We are able to buy a home and cars, helping us to invest in our future. When you use debt irresponsibly by funding a lifestyle outside your means, there are long lasting consequences for you and your family.

If you have ever been in debt, you are familiar with how it can destroy you financially, physically and mentally. Debt eats away at all your positive energy because all you can do is worry and stress about money. As the debt continues on, so does the interest only furthering your debt. It becomes impossible for you to make any payments and now you’re afraid to answer your phone, open your mail or even answer your door. Here are a couple ways debt can affect you:

Setting an example – You may be sending a poor message to your family. You may be hiding your debt from your family by continuing to spend money that you don’t have. This will paint an unrealistic picture of financial responsibility. If your debt is exposed then your bad habits also make a lasting impression on your family and can encourage irresponsible financial behaviour especially in your children.

Lifestyle – Dealing with high levels of debt can and will contribute to emotional distress. You will start to suffer from anger and depression causing household fighting making your home life unsafe and joyless for you and your loved ones even though it was never your intent. Debt can cause divorce and even long term health issues. Even when debt is beyond your control due to unforeseen circumstances, it looks bad. It can mean repossession of vehicles or even force you out of your home.

So what can you do?

Don’t ignore your debts. It’s better to spend the rest of your life trying to pay off debt as opposed to putting your family at risk. Work together with your family and come up with a budget. Look at what you can cut down on and what you can live without until things take a turn for the better.

Make a list of all your debts. You may want to consolidate all your loans into one to save yourself on the higher interest cards or loans. Consider bankruptcy if it’s your only option. Consider taking out a personal loan with low interest that will also help you rebuild your credit. With the loan pay off your debt and with the extra money you’ll be freeing up by cutting out unnecessary expenses use towards paying off your loan. Consider the services of Prudent Financial who is the leader in the financial industry offering loans to people with bankruptcies, proposals and bad credit histories across Toronto and the GTA since 1984.

It’s a long tough road but if you’re tired of being paralyzed, you need to take control of your debt and take back control of your life! Visit http://www.prudentcreditrepair.ca/ for more information.

Will A Payday Loan Affect My Credit Score?

When a payday loan seems like your only option, you need to take a step back, consider your situation and determine how you got there. Do you need a payday loan because you have bad credit, is it because you have no credit or are you drowning in debt? Every individual’s situation is different.

Why would I need a payday loan?

Payday loans are used for a number of reasons. They are popular for people who need quick cash. When you’re in the position of needing money immediately, the advantages of a payday loan outweigh the disadvantages. Here are just a few reasons one would want to use a payday loan company:

· You can get a payday loan regardless of your credit score as there is no credit check involved
· You can apply in person, online or on the phone
· The application process is quick and the loan can be obtained in less than 24hrs
· No one else is involved with the loan so it’s discreet
· People in a desperate state of finance may not be aware of their options
· Payday loan companies are everywhere
· It’s a quick fix

Those may all seem like great reasons to turn to these types of loan but payday loans come with a high price so beware!

Will a payday loan affect my credit score?

Yes, if you don’t make your payments on time, you will be reported to the credit bureau, further damaging your credit score. Since payday loans are easy to obtain and you don’t need a credit check, it’s very popular to people who are already experiencing financial hardship and borrowing money with such high interest rates are only putting them in a worse situation. This is really bad for the borrower. When this happens, it’s extremely easy to get caught up in the payday loan trap with a “rollover” loan which essentially is getting another loan to repay the last loan and so on...

There are many alternatives to getting a payday loan. If you need a loan, research your options. There are many financial institutions that will provide you with a loan and also help you rebuild your credit in the process. Prudent Financial Services has been repairing credit with open and affordable loans to people with bad credit histories since 1984.

For further information visit www.prudentcreditrepair.ca

Taking a Loan to Consolidate your Debt

If you’re struggling to keep up with your credit card debt, car loan debt or other consumer debt, then it’s time to consider your options. Debt consolidation has made the process easier and can help you secure simpler monthly payment plans along with lower interest rates.

What is Debt Consolidation?

Debt consolidation is used to manage your money. It’s a strategy in which a borrower takes out a loan to pay off all other loans. It’s done to secure a lower interest rate and for the convenience of one monthly payment over a longer period of time.

Here are a couple great options for debt consolidation:

Home Equity Loan – A home equity loan can be referred to as a second mortgage or borrowing against your home. This type of loan allows homeowners to obtain funds that are secured by your home’s current value on which you do not owe money. This type of loan has the advantage of carrying a fairly low interest rate. Another option for those with equity in their home is to refinance your property by increasing the amount you owe and then using the extra cash to pay off your debt.

Personal Loan – A personal loan is an unsecured loan that is not backed by collateral and is based on the borrower’s integrity and ability to pay. It is commonly used for the purpose of debt consolidation, vacation or purchase of goods. The upside to taking a personal loan is that the interest rates may be significantly lower than the interest on credit cards.

So if you’re tired of catering to a bunch of smaller debts then taking a loan to consolidate your debt is right for you. Managing money is difficult especially when you’re trying to juggle a large number of debts all of which have high interest rates. Don’t get swallowed up by interest. Prudent Financial Services offers the most affordable open loans to people with bad credit across Toronto and the GTA.

Visit www.prudentcreditrepair.ca for more information!