Defaulting on a Loan

Defaulting on a loan means missing payments long enough that the lender stops waiting and starts collecting. The timeline is fairly standard: a payment is late, then delinquent at 30 days, reported to the credit bureaus, and charged off around 120–180 days — at which point the debt is usually sold to a collections agency for cents on the dollar. Secured debt gets a shortcut: the lender takes the collateral, so a car is repossessed and a house enters foreclosure. The credit-score damage lasts seven years, which is why lenders will almost always restructure — forbearance, a payment plan, a longer term — if you call before the misses start.