Most people today rely on financing to buy a house, a car, or to start a business. While these loans help people who do not have the immediate funds to complete such large purchases, these lines of credit also carry some risk. Finance companies expect to get paid regardless of people’s life situations. Even so, many events in life can make it difficult or impossible for a person to keep paying on a loan. People are advised to be prepared for a potential financial crisis if the unthinkable should happen to them.
Losing a Job or Taking a Cut in Pay
Many people each year experience layoffs and pay cuts. One commonly overlooked situation is an on-the-job injury which will cause a significant loss in pay. When a person no longer earns as much money, or no longer has a job, he or she must still pay their mortgages and loans. Some mortgage companies will provide a grace period during which a person is not expected to make a payment. This grace period usually is a month or two long, which may allow a person to apply for unemployment or find a new job. However, if a person cannot resume making payments, a mortgager will begin the foreclosure process and possibly force the person to move out of the residence. The mortgager must recoup the money that is owed by selling the home and settling the mortgage. In cases where a person is injured on the job, help may be found through a personal injury attorney.
Totaling a Car in an Accident
Millions of people each year wreck their cars to the point that their automobiles are totaled. When a person totals a car, he or she will still be expected to make payments on the loan, even if the car can no longer be driven. To prevent that, people can protect themselves from defaulting on the loan by purchasing gap insurance. Gap insurance will pay off the balance on the loan after the insurance company pays out the value of the car and applies that amount to the car loan. If there is a deficit, the gap insurance will pay that remainder.
A prominent Charlotte NC personal injury attorney states, “The auto insurance company’s goal is to pay you as little as possible, and to do this they will try their best to get to you before you have the opportunity to consult with a lawyer.” Thus, it is imperative to cover all bases in this matter. Make sure to seek damages for all costs incurred so that you will be able to pay doctor or hospital loans resulting from your injuries.
Business Failure<
If you fail to meet the financial obligations stated in your loan agreement this may cause you to default on said loan, and because of the differences in each agreement, penalties vary. The repercussions of not being able to pay on the loan can be immediate as well as delayed. Immediate effects include but are not limited to a drop in one's personal and business credit, spiked interest rates, and property being seized. For relief, some businesses try to renegotiate the terms on their loans, utilize debt relief options, cut business costs and sell assets. Unfortunately, defaulting on a loan of this stature makes it difficult to find new loans. To avoid defaulting on a loan, you should have a solid payment arrangement in place before borrowing, and diligently read the loan's small print until all the terms of the contract are understood.
Divorce
Couples often enter into a loan contract with the intention of staying together and paying off the loan with their incomes. When a couple gets divorced, however, the breakup of the marriage often causes one person to be responsible for the loan’s balance. When this happens, that individual may not be able to keep making payments. Many people in this situation must file for bankruptcy or get help with their bills from a credit consolidation company. Financiers do not like to lose money to bankruptcies or reorganizations. They may offer the person paying the loan a chance to refinance at a lower interest rate rather than lose out on the loan’s principle altogether.
Illness or Death
Even the healthiest of people can become sick or die unexpectedly. When people default on loans because of sickness, they may have to let the loans go and allow their homes, cars, or other possessions to be repossessed. If no tangible possession can be reclaimed by the financier, the person may have a judgment entered against him or her. When a person dies, however, his or her survivors may use a life insurance policy to pay off the loan’s balance.
Life is unpredictable, which makes accepting financing for a home, car, or other purchase risky. Even so, people can protect themselves from defaulting by knowing about their options for paying off balances, refinancing, or leaving the contract. Finance companies expect to be paid, despite a person’s financial circumstances.
Researcher Nickey Williams knows from experience the many risks life holds and insists on being covered. Charlotte NC personal injury attorney Herbert W. Auger has the experience needed to deal with unhelpful insurance companies, and will give exceptional guidance in all matters concerning injury claims.