--- title: Consequences of defaulting description: If you're struggling to keep up with payments or want to explore your options, contact us in advance. We're ready to assist you in avoiding extra fees and charges by discussing your situation early. --- [Skip to content](https://help.breezefinance.com.au/knowledge-base/consequences-of-defaulting#main-content) [Sign in](https://help.breezefinance.com.au/_hcms/mem/login?redirect_url=https%3A%2F%2Fhelp.breezefinance.com.au%2Fknowledge-base%2Fconsequences-of-defaulting&hsLang=en-au) Open main navigation Close main navigation - [Sign in](https://help.breezefinance.com.au/_hcms/mem/login?redirect_url=https%3A%2F%2Fhelp.breezefinance.com.au%2Fknowledge-base%2Fconsequences-of-defaulting) How can we help you? - There are no suggestions because the search field is empty. 1. [Breeze Finance](https://help.breezefinance.com.au/knowledge-base?hsLang=en-au) 2. [ Difficulty paying ](https://help.breezefinance.com.au/knowledge-base/difficulty-paying?hsLang=en-au) 3. [ Defaulting on a loan ](https://help.breezefinance.com.au/knowledge-base/difficulty-paying?hsLang=en-au#defaulting-on-a-loan) # Consequences of defaulting ## Failing to repay a loan or payment plan can lead to serious and lasting consequences, such as significant harm to your credit rating, possible asset seizure (for secured loans), and legal proceedings to recover the debt. #### **KEY CONSEQUENCES** - **Credit score damage -** a default is recorded on your credit report and significantly lowers your credit score. This record remains for five years, even if the debt is fully paid. - **Difficulty obtaining future credit - ** the default makes you a high-risk borrower in the eyes of most lenders, making it difficult to be approved for new loans, credit cards, or even some utility contracts in the future.  - **Asset repossession (secured loans) -** when it comes to secured loans like home, car, or equipment loans, the lender has the right to take back the asset used as collateral to recover their money. Often, the amount received from selling the asset does not cover the full loan, and in such cases, you will still be responsible for paying the remaining balance. - **Debt collection and legal action - i**f the debt remains unpaid, lenders can take legal action to get a court judgment against you, which could lead to wage garnishment (money withheld from your pay) or forced seizure of other assets. - **Mounting fees and charges -** Overdue fees, default interest rates, and enforcement costs will be added to your outstanding balance, increasing your overall debt burden. - **Serious credit infringement:** If the lender cannot contact you and believes you have moved without providing a forwarding address (a "clearout"), they can list a serious credit infringement, which stays on your file for seven years.  We understand that facing financial challenges can be tough, and we're here to help you through it. If you're having trouble keeping up with payments or simply want to discuss your options, don't hesitate to call our friendly team. We're always ready to support you and find the best way to avoid extra fees and charges by talking about your situation early. 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