What Happens When You Miss One Or Two House or Car Payments

NEW YORK (MainStreet) — Consumers who are facing delinquent car or mortgage payments should start by negotiating with their lender instead of ignoring the problem.

Dealing with the lenders head-on when you know a late payment is imminent will help you in the long-run, because they will be more willing to work with you and offer a variety of payment options. This can be one way to salvage your credit score. If you are coping with a budget crunch or if the unemployment checks have nearly run out, start addressing the issue of having to skip a payment.

The worst thing consumers can do is disregard the issue entirely and believe they can start making payments on their delinquent account once they start earning a salary. Depending on your lender and if you routinely pay on time, the company might have a grace period of a week before incurring a late fee or will reverse it, said Leslie Tayne, a Melville, N.Y. attorney specializing in debt relief. 

Some companies allow borrowers to qualify for a forbearance, which provides temporary relief from your full payment or to skip a couple of payments, said Bruce McClary, spokesperson for the National Foundation for Credit Counseling, a Washington, D.C.-based nonprofit organization. 

“You never know if you qualify for these or other options unless you take the first step and call the lender before things get worse,” he said.

Auto Lenders Are Less Forgiving

Many lenders are less merciful when it comes to missing a car payment and repossession is more likely to be on the table.

Some lenders will repossess the vehicle “as soon as a payment is missed in some cases,” said McClary. Discuss your options with the lender to avoid further delinquency. Some lenders will want to avoid the extra work and expense of repossessing your car and might allow consumers to skip or defer a payment, he said. Don’t count on it and call them to see if it is a viable option. Others might be more lenient and can offer to change the terms or refinance the loan for more affordable payments.

“If those actions don’t look possible, you can try to sell the car or turn in the keys for a voluntary repossession,” McClary said.

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