What happens if the Borrower cannot pay off a loan within the time frame initially agreed upon?

Published on: 22 September, 2021

Updated: 23 November, 2022

We understand that sometimes things come up.

If the agreed-upon timeline has elapsed and the Borrower still has an outstanding balance, we will first ask both parties if they would like to extend their loan. Upon any new agreement, we allow your original loan to be extended for up to 12 calendar months.

In the event of a loan extension, the Lender of this respective loan will receive an additional 3% interest on the remaining payoff amount of the loan term.

Secondly, a Lender and Borrower can come to an agreement to cancel the remainder of the loan if both parties agree to such action. This decision will generate a new addendum to your previously agreed upon contract and wipe clean any outstanding debts.

Finally, a Lender can find a Borrower "in breach" of their contractual obligations. To trigger such an event, both a cancellation and extension must be denied by the Lender. At such a point in time, the loan will end in a default state, and using their generated agreement, the Lender of any given loan is legally allowed to seek measures through a court of law to retrieve any unpaid debts.

Note: For any loans that end up in the default state, as a Lender of said loan you may be able to write off the money you lost on your taxes! Read our helpful guide: How to Write Off Bad Debt For Unpaid Loans Friends Owe You

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