Delinquent

Delinquent summary:

• Debt is delinquent when you miss a payment deadline, but many lenders offer a grace period before any consequences kick in.  

• Delinquent accounts could lead to late fees, damage to your credit standing, and even a debt lawsuit. 

• Setting up automatic payments is one way to help prevent accounts from becoming delinquent.

Delinquent definition and meaning

Debt becomes delinquent when you miss a payment or make a late payment. Delinquent debt can have consequences, including late fees, credit score damage, and the risk of loan default. You can avoid delinquency by making regular, on-time payments. 

Key concept: 

A debt becomes delinquent when you fail to make a payment by the due date. 

Delinquent debt: a comprehensive breakdown  

When a borrower misses a payment on a loan or other debt account, the account is delinquent. 

Your account is technically delinquent the day after your payment deadline. Even so, paying a day or two later typically won't result in severe consequences. Your lender may charge a late-payment fee, but you likely won't face additional penalties. For instance, credit card issuers typically don’t report your payment as late unless it’s at least 30 days past due. At that point, however, your late payment could be reported to the credit bureaus.

Installment loan lenders commonly give borrowers a 15-day grace period. You might have that much time to make your personal loan or mortgage loan payment before it’s considered late or any late fees are added. Check your loan agreement to learn more about whether your lender offers a grace period.

What to do if you have delinquent debt 

Don't beat yourself up if you have delinquent debt because you missed a payment. It happens to many people for many reasons. Focus on doing what you can to fix the situation. The best thing you can do is try to make the payment as soon as possible. 

That’s because if you continue to fall behind on payments, your debt could go into default. Defaulting can result in more severe consequences such as:

• A drop in your credit score rating

• Debt sent to collections 

• A debt lawsuit

Talk to your lenders and creditors if you're struggling to afford to make regular payments. You can ask whether they will let you put off payments for a short time or if they’ll agree to change your loan through loan modification. 

How to avoid delinquent debt

You can avoid delinquent accounts by paying your bills on time every month. Setting up automatic payments makes it easy to avoid missed or late payments. This is a great option if you sometimes forget to pay your bills on time. 

If you’re keeping up with your payments but your budget is maxed out, you may want to explore debt consolidation. Consolidating means taking a new loan and using it to pay off multiple debts. One benefit of debt consolidation is that your new loan payment could be lower than the total of the monthly payments you’re making now. Getting some breathing room in your budget could help you avoid letting any accounts become delinquent in the future.