How A Default On Debt Affects Your Financial Health

A default is when an individual stops making payments on a debt. If the debt is secured, such as a mortgage or an auto loan, the lender can repossess the asset that was acquired with the loan. If the debt is unsecured, such as a credit card balance, the lender can sell the debt to a collections agency who will attempt to collect the owned funds and, if necessary, seek a court ruling that gives them the right to take possession of the borrower’s assets.