What is the Difference Between Delinquency and Default with Debt?
With wages remaining stagnant and inflation resulting in an increase in costs, it is becoming more difficult for consumers in Georgia to pay their debts. Is more of your income going toward necessities, such as bills or groceries or childcare? Across the state and country, inflation is leading more Americans to take on debt that they cannot repay. More Americans are making charges on credit cards that they cannot repay at the end of the billing cycle. In addition, “buy now, pay later” loans are becoming more common. At the end of those loans, debtors are struggling to afford the balloon payments they owe.
As you become late on repaying your debt, your repayment status can be classified as delinquent or in default. What is the difference between delinquency and default in debt, and can either type of debt be settled? Consider the following information from our Lilburn debt lawyers.
Late Payments Lead to Delinquency Then Default
What is the difference between delinquency and default when it comes to debt? In short, late payments lead to delinquency, and then to default.
According to Chase, delinquency is the term that refers to a situation where “a borrower falls behind on payments for even a short period of time.” Default occurs after a lengthy period of delinquency and is defined as a situation where “a borrower is not fulfilling the terms of a credit card or loan agreement by not consistently making payments or failing to make them entirely over a longer period of time.”
Can I Settle Debt That is Delinquent or In Default?
Settling debt that is in default is typically the easiest debt to settle. At this point, your creditor may have already made plans to charge off the debt. In some cases, the debt may have already been sold for pennies on the dollar to a debt collection company. In short, once a debtor is in default, the creditor or debt collector usually believes it has the least likely chance of recovering what is owed. As such, you may be able to settle the debt for a relatively low percentage of the total debt owed.
You can also settle debt when you are delinquent. Though you are not as far behind on payments when you are delinquent as when you are in default, you may still be able to settle the debt with a debt collector.
Contact a Lilburn Debt Settlement Attorney for Assistance with Your Debt Relief Options in Georgia
When you are struggling with credit card debt or any other type of unsecured debt and are behind on payments, you should find out about your options for debt relief. If you are in a position where you may be able to make a lump sum payment for a portion of the total debt you owe, you may be able to negotiate a reasonable debt settlement agreement with your creditor or creditors with assistance from an experienced Georgia debt settlement lawyer at Konn Law Firm LLC. Contact our firm today to learn more about settling your debt and getting relief.
Source:
chase.com/personal/credit-cards/education/build-credit/default-vs-delinquency
