What Happens When You Miss Your Monthly Payments

When You Miss Your Monthly Payments


With this article, we aim to inform you of what you might come across when you stop paying your loans. Be careful though, because once you are on that track, you will have a hard time getting back.

Monthly loan payments are mandatory when you take a loan. The more loans and taxes you have, the more you will have to pay each month. However, what happens when you miss your monthly payments? The chances are that things will get ugly fast.

With this article, we aim to inform you of what you might come across when you stop paying your loans. Be careful though, because once you are on that track, you will have a hard time getting back.

Your Creditor Will Contact You

When you miss your monthly loan payments, you may be called by your creditor or receive a letter. You will be informed of what you did, and you will be charged, depending on the contract you signed with that lending institution. If it’s your first time missing a payment, you may get on track by paying right away. However, because you missed a payment, your creditor may want a form of assurance that you won’t skip on future payments. He may insist that you set up a direct debit, so there won’t be any more problems. If you miss a payment within a few days, your credit report won’t be affected, but you should pay on time.

Your credit score starts to drop after two consecutive months in which you’ve missed your monthly loan payments. It doesn’t happen all at once, but rather gradually. Each month you fail to make your repayment, your credit goes a little lower.

You Will Damage Your Credit Score

If you miss your monthly loan payments, your credit report will be affected, and it will show that you didn’t pay on time. You may have received some phone calls and letters from your creditor. Remember that your credit report will be analysed whenever you request a loan and if you have too many late monthly loan payments, your lender might refuse you. Or, in the best-case scenario, he will approve your loan request but add some restrictions because you are seen as a high-risk customer.

Also, keep in mind that missed monthly payments will result in bad credit, so try your best to pay on time.

Default and Escalation

If you miss the payment for sixty days, your account may fall into default. A default is a severe financial action, and it will make it hard for you to get a loan for a couple of years. The creditor’s collections department will want to meet with you and discuss your situation in detail. You might be able to tailor another repayment plan with your creditor, but only if he/she agrees to that.

You will be informed of the period that you have at your disposal to make the repayments if you do not want things to escalate even further. Be aware of the fact that there are two interconnected things when you miss your payments: your score drops further down, and you can be charged financial penalties, represented by a certain percentage of each monthly repayment. Therefore, you simultaneously diminish your chances of ever getting another loan, and your debt continues to grow, which will make it even harder to dissolve it.

You Will Receive a Letter of Demand

When you get the default, you will have thirty to sixty days to pay. When that time passes, the creditors will seek full payment through a letter of demand. If the letter of demand fails to make you pay, your creditor will pass your case to debt collectors. He/she won’t need to call you or send letters to you anymore, but the collectors will make your life a nightmare.

The Next Step – Court Action

If the letter of demand didn’t do it for you, maybe a court action will. The creditors will legally enforce payment. A judge may decide how much you owe to the lender, including interest and other fees. You don’t want to end up in court, that’s for sure. Not only that you will be spending huge sums of money on court expenses, but you could definitely end up broke, especially if your creditor has a very good case against you. Considering that you’ve missed on your monthly loan payments, it is obvious he/she will have it.

There are several methods you can avoid this. The most obvious one is to pay your debt. You can also try to reach an agreement with the creditors, declare bankruptcy, although it’s not recommended, you can consolidate your debt or refinance. None of these is guaranteed that will get you out of the catastrophe you’ve put yourself into, but it doesn’t hurt to try.


Missing monthly loan payments is a bad thing, and if you are in this situation, try to get some expert advice from a credit restoration and repair service like Clean Credit. They’ve been in business for quite a while now, and they’ve helped hundreds of Australians that were in the very same situation as you.

Share on facebook
Share on twitter
Share on linkedin


Request a call back for a free consultation