What Does it Mean to Default on a Loan in Fort Lauderdale?

Defaulting on a loan — failing to make scheduled payments on time — can expose you to legal claims, lead to property being repossessed, and make it difficult to obtain further loans or credit.

Certainly, you should avoid defaulting on any loan you have taken out. If you are unable to make monthly payments as required on an outstanding loan in South Florida, you should speak to a Fort Lauderdale debt defense lawyer.

We may be able to pursue legal defenses that allow you to dramatically reduce the amount of money you owe on a loan. If your creditor has begun legal action against you, our experienced debt defense attorneys may be able to have the lawsuit thrown out of court. We can also help you explore ways to repair your credit.

If creditors are threatening you about late payments on a loan in Florida, contact the Loan Lawyers in Fort Lauderdale for help without delay. We have very affordable flat-rate fees and payment plans, and handle many cases on a contingency basis, meaning you won’t pay any attorney’s fees or costs unless we win your case.

What Does ‘Default’ Mean?

To default means to fail to fulfill an obligation. The term “default” is often applied to the failure to repay a loan. A lender may declare a borrower to be in default after they have missed a certain number of scheduled payments or a specific amount of time has passed since the last payment was made.

Because it is not uncommon for borrowers to fall behind on loan payments — and because creditors want to be repaid above all — many lenders allow a “grace period,” letting a borrower fall behind by 30 days to several months before they are considered to be in default. But some creditors offer no such leeway.

If you have missed payments or expect to miss a loan payment, you should review your loan agreement to understand your lender’s requirements and allowances, including what constitutes a loan in default.

What Happens When a Loan Is in Default?

What happens after you default on a loan depends on the type of loan.

With a secured loan, there is collateral on the loan, which refers to assets that the lender is allowed to seize in the event of non-payment. A home loan, also known as a mortgage, is secured by the real property purchased with the loan. The lender may foreclose on your mortgage and seize your home if you default on a home loan. 

To seize your home after you have defaulted on your loan, your mortgage holder would first accelerate the loan, which requires you to pay the balance at once. When you fail to make this payment, the lender can evict you and resell your home to recover their loss.

Similarly, the lender might repossess your car if you default on the loan extended to you for such a purchase. Cars, motorcycles, RVs, boats, personal watercraft, and other vehicles sold at auction have typically been repossessed following a loan default.

But even after seizing and selling your property, the lender may sue you for the difference between what you owe and what they were able to recoup, an amount known as the “deficiency balance.”

Other loans are known as “unsecured debt” because there is no collateral available to the lender if the borrower fails to pay the loan. Personal loans, student loans, and “loans” made through credit cards are unsecured. There’s no asset to seize, but that doesn’t mean the lender won’t take action if you default on these loans.

First, as many Florida consumers have experienced, if you default on an unsecured loan, the lender will refer your account to an in-house collection department or a third-party collection agency. Despite federal and state laws meant to stop debt collector harassment, some have been known to repeatedly call debtors at all hours of the day and night and to contact employers to have debtors’ wages garnished.

If collection efforts fail, the lender or collection agency may file a lawsuit to demand repayment. If successful, the court could order assets seized, wage garnishment, or a judgment lien on your property. 

But even before you are harassed or sued or face foreclosure, the fact that you have defaulted on a loan will be reported to the national credit bureaus. This will negatively impact your credit rating and make it harder to obtain further loans with reasonable interest rates or even to open a new bank account. Defaulting on a loan can also lead to higher rates for auto, home, or other types of insurance.

In some cases, a prospective employer or landlord will check your credit reports and hold a bad credit rating against you.

Signs Your Loan May Be Heading Toward Default

Failing to make the required loan payments will lead to a default under these time frames:

• Mortgages — as soon as 30 days after a missed mortgage loan payment.
• Auto loans, personal loans — 90 days without a payment
• Credit card debt — 180 days with no payments.

If you hear from a debt collector, it is likely because you have defaulted on a loan or other financial obligation.

How to Avoid Defaulting on a Loan

If you are struggling to make mortgage payments or other payments, you should contact your lender or loan administrator. Particularly in challenging economic times, lenders will work with consumers to help them avoid default. They may be able to lower your payments or interest rate, or at least waive late fees you have already incurred for missed payments.

In some cases, you may be able to arrange a temporary reduction or suspension of loan payments, known as a loan “deferment” or “forbearance,” for up to a year. This will require some assurance that your financial problems are temporary.

If you have multiple debts but still maintain a good credit rating, you may consider a debt consolidation loan. A single loan payment is often easier to manage under loan consolidation, and these loans typically have lower interest rates than prior debt.

How to Recover from a Loan Default

Repairing your credit standing after defaulting on a loan requires establishing a history of making payments on time. Rebuild your credit rating over time with:

• A secured credit card which requires making a small deposit to establish your credit limit.
• A small installment loan requiring you to make fixed, scheduled payments (e.g., monthly) over a predetermined period to pay it off.
• Consistent on-time payments for rent, utilities, etc.

When to Contact a Florida Debt Relief Attorney

If you are struggling with debt and are in danger of defaulting on one or more loans, or are already in default on a mortgage or auto loan, a Florida debt relief attorney from the Loan Lawyers in Fort Lauderdale can fight to protect your rights as your creditors seek payment from you.

We can defend you in a foreclosure attempt or if you are the target of a debt collection lawsuit. We have several strategies for defending against a debt collection lawsuit. We can also work with you and your creditors to reduce your debt obligations, or, where applicable, to hold your creditors and debt collectors liable for violating your rights.

Let an attorney with a solid grasp of consumer law explain the options you have available to you if you are facing the consequences of a loan in default. We can save you time and frustration, help you avoid mistakes, and give you the best chance of keeping your home and a reasonable credit rating.

Talk to a Florida Loan Default Attorney Today

Any time you default on a loan, you are at risk of having a lawsuit filed against you. However, a lawsuit does not automatically mean you will face the serious consequences of an unfavorable judgment. At Loan Lawyers, our experienced Fort Lauderdale debt defense attorneys can help you avoid a judgment and the negative impacts that come with one.

Call us today at (954) 523-HELP (4357) in Fort Lauderdale, Florida, or reach out online for a free review of your case.

This post was originally published in April 2021 and has been updated for accuracy and comprehensiveness in July 2025.