Financial agreements can include many types of various contracts such as home mortgages, personal loan contracts and car loans. If a debtor defaults on a secured loan it may entitle the lender or bondholder to repossess the property or asset and attempt to recapture the loan principle amount and the interest payments.
Defaulting can be extremely detrimental to a debtor and can lead to the following:
Contractual obligations will determine the amount of missed payments allowed by the lender. Repossession and property foreclosure will devastate the borrower's credit score. If a home is repossessed and sold and the money recovered by the lender does not cover the total cost of the home the borrower may be responsible for paying the remaining balance.