What is a Defaulted Loan?
A. A defaulted student loan occurs when a borrower fails to repay his or her loan according to the terms agreed upon on the promissory note. This usually happens if a borrower becomes 270 days delinquent with the lender. Default can also occur for failure to submit requests for a deferment or cancellation on time. If a loan defaults, the guarantor (OGSLP) purchases the loan from the lender and begins collection activities.
When you take out credit or a loan with a lender, there will be a repayment plan set in place. The repayment terms detail when money is to be paid back to the lender, usually monthly or weekly. If you miss these payments, then the lender may class the credit or loan as a defaulted loan. A defaulted loan status can have serious effects on your chance to gain credit in the future. It can give you an adverse credit history and can lower your credit rating and score. Financial establishments use these ratings to assess whether you will be a good enough risk to warrant them lending you credit. There are a number of options available to you if you have received a defaulted loan notification. Do not just ignore these notices; the longer you leave them, the worse the situation will become. In some cases, repossession of goods can occur, and in some countries, non-payment of debts can be a prisonable offence. Think of a defaulted loan notice as warning sign that it is not too late to change the
