which of the following is a consequence of default?

Defaulting on a loan typically leads to serious financial and legal consequences, such as damage to your credit score, demands for immediate repayment, collection actions, and possible legal enforcement against your assets.

What “default” means

In finance, default is when a borrower fails to make payments as agreed in the loan or credit contract, such as missing required interest or principal payments over a set period.

Lenders then treat the loan as broken terms, which allows them to trigger special remedies written into the agreement.

Common consequences of default

Typical consequences of default include:

• Damage to credit score and a negative mark on your credit report, often lasting for years and making new credit more expensive or harder to obtain.

• A demand for immediate payment of the full outstanding balance, plus any unpaid interest and fees. Acceleration of the debt is a standard clause in many agreements.

• Transfer of the debt to collection agencies, which can add collection costs and intensify contact attempts.

• Legal action, such as court judgments that can lead to wage garnishment or seizure of certain assets, depending on local law and loan type.

• For secured loans, repossession or forced sale of collateral, such as a car or property, to recover the outstanding debt.

Any option in a question set that mentions these effects (credit score damage, repossession of collateral, legal or collection action, or immediate full repayment) would be a correct consequence of default.

Information gathered from public forums or data available on the internet and portrayed here.