What happens if you miss a debt consolidation loan payment?

Missing a debt consolidation loan payment doesn’t mean you’ve failed. And it doesn’t have to derail your progress. First, understand your options and take quick action. That way, you can limit the setback and keep your plan moving forward—even during a rough patch.

Let's review what happens if you miss a debt consolidation loan payment so you can take steps to avoid it. 

What happens if you’re late on a debt consolidation loan payment?

If you miss a debt consolidation loan payment, your lender may charge a late fee. Late fees can increase the amount of money you owe, making it harder to repay your debt. A late debt consolidation payment could also cause your credit score to drop, making it harder to borrow money affordably when you need to.

Creditors typically report late payments to the credit bureaus after 30 days. If you're late making a debt consolidation loan payment but manage to catch up before the 30-day mark, your credit score may be unaffected. 

On the flip side, if you miss multiple debt consolidation loan payments, your lender might consider your loan to be in default. They may turn your debt over to a collection agency or sue you for the balance. 

How do late loan payments affect your credit score?

Your payment history is the most important factor in your credit score. A late debt consolidation loan payment could cause your credit score to drop. 

The longer a debt consolidation loan payment is late, the more credit score damage it could cause. A payment that’s 30 days later will generally cause less damage than one that’s 90 days late.

A late payment remains on your credit report for up to seven years. As time goes by, the negative impact of a late payment will start to fade.

What debt consolidation loan lenders may do if you miss a payment

If you're late paying a debt consolidation loan, your lender may charge you a late fee and you may accrue more interest on your unpaid balance. If you don’t catch up on your payment within 30 days, your lender will likely report your late payment to the credit bureaus. 

Your lender may also send you a notice reminding you of your overdue payment. Your lender may eventually tell you they’re giving your debt to a collection agency or taking other legal action. This depends on how long your debt is unpaid. 

What to do if you miss or can’t make a payment on your debt consolidation loan

A missed debt consolidation payment could cost you money and hurt your credit standing. If you miss a debt consolidation loan payment because you forgot to pay, make the payment immediately and contact your lender to ask them to waive their late fee. They may agree if it's your first late or missed payment. 

If you don't have the money to make your debt consolidation loan payment, contact your lender ASAP to discuss your options. They may agree to let you pause your loan if you're experiencing  financial hardship. They may agree to modify the terms of your loan, lowering your monthly payments. 

You can also review your budget and figure out if reducing some expenses could free up the money to make your loan payment. Boosting your income with a side hustle could be an option.

What can you do if you’re struggling with payments?

If you’re struggling with an upcoming debt consolidation payment because of a temporary reduction in your hours at work or a large unplanned expense that ate up most of your paycheck, that’s a temporary situation. You may be able to get back on track by tightening your budget or looking for some extra work.

If you're struggling to make your loan payments in general, here are some options:

• Talk to your lender about putting your loan into forbearance

• Ask if your lender is willing to modify the terms of your loan

• Look into refinancing your loan to one with a more affordable payment. 

• Talk to a lawyer to figure out if filing for bankruptcy is right for you

• Speak to a debt relief company about whether you might be a candidate for partial debt forgiveness

What’s next?

A single missed debt consolidation loan payment may not mean much of a consequence. If it's truly a one-time thing and you're able to catch up on your payment quickly, your lender might waive your late fee and agree not to report your late payment to the credit bureaus. 

Otherwise, review your budget for any spending changes that could free up money for your loan payments. And if not, talk to your lender or a debt expert about your options before you risk missing more payments.