Risks of Not Paying a Deficiency Balance If you do not pay your deficiency balance: You could be taken to court or an attorney may try and collect from you (suing) which can start legal proceedings that allows the bank, dealership or other lenders to garnish your wages for up to 25% of take-home earnings. This is a more comprehensive examination of how everything falls apart if you shrug off this responsibility:
Legal Consequences
Debt Collectors – If you fail to pay the deficiency balance off right, it is possible that a collection agency could end up with your debt. The consequence of this is the constant collection pressure from debt collectors14.
Possible litigations: if necessary the lender or collector can escalate to file lawsuits against you.deficiency balance (ad) If they win, the online loan company can secure a judgment which could include wage garnishment; bank account levies and liens on your property23.
Impact on Credit Score
Adverse Reporting: If you have a remaining balance, the lien could be reported to your credit report as it might not take long for them to occupy and ruin test scores from settlement right up. This black mark will be with you for years to come and could prevent you from getting any type of loans or credit in the future14.
Long-term Financial Effects: A bad credit score affect you beyond immediate loan applications- it can influence rental agreements and insurance rates as well5.
Potential Remedies
Repayment plans: You should speak to your servicer about what kinds of repayment plans they have available. However, this could assist circumnavigate series and lawful steps not to mention enable you to payback personal debt slowly24.
Debt settlement — With some creditors, it may be possible to negotiate a lower lump sum payment for less than what you owe. This is often a difficult path to negotiate and reliant on the policies of your lender36.
To recap, ignoring a deficiency balance can be disastrous from a legal and financial standpoint. This also illustrates the importance of taking action to negotiate or make arrangements with creditors in order to minimize these risks.
