One of the dangers associated with the conclusion of a payday loan agreement is the inability to predict the future – although we currently have the means to pay installments, it may turn out that due to various events, we will no longer be able to pay liabilities. What happens if we do not pay back the payday loan on time?
In general, it is best to not allow a payday loan to become unpaid. Of course, sometimes it is difficult to predict different situations – job loss, illness of a loved one, accident, personal problems are just some of them. We can mainly expose ourselves to significant additional costs as well as problems with taking further payday loans and credits in the future.
Lack of debt repayment on time may have many consequences, which we may feel even when we finally settle the liability. Below we present the most important ones.
The main consequences of not paying the payday loan:
• calculation of contractual penalties and interest
• transfer of debt to debt collection
• entering debtors’ databases
• difficulties in taking further payday loans and credits
• transferring the case to court and bailiff enforcement
Below we describe more precisely the above consequences – it is also worth pointing out that they do not always involve any debt, so the sooner we pay off our liability, the less negative consequences it affects us.
Contractual penalties and interest on the lender
When we are late with a commitment even one day, it happens that the lender may start to charge contractual penalties and additional interest for each day of delay. Usually, interest rates are not very high, however, it happens that an installment payday loan can significantly increase its cost precisely by contractual penalties.
Debt collection and bailiff’s activities
Most often, non-banking companies and banks transfer debts to debt collection to companies with experience in this field. The task of the debt collector is to persuade the debtor to settle the obligation.
If the debt collection fails, the case may be referred to court. When the lender wins, then the bailiff can begin to enforce the bailiff. A bailiff’s attachment may concern part of the payment, real estate or movable property, for example a car or RTV equipment.
Entry in the debtors’ database
Lack of debt repayment means also a negative credit history in databases. Most often, the entry to the “black list” occurs when the date of debt is exceeded by a minimum of 31 days.
Entering the debtors’ database means worsening of scoring, ie points determining creditworthiness . Then we will have difficulties in obtaining further credits and payday loans , because the institutions checking us in the database will receive information that we are a late client and we have or have debts. Information in the databases is visible for several years!