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6 consequences of not paying a loan

Find out what the consequences of not paying a loan are and what you can do to avoid this situation.

To the wconsequences of not paying a loan are, of course, serious. The increase in interest rates and the cost of living, largely due to the rise in inflation, could further aggravate a well-known scourge: bad debt.

For this reason, before applying for a loan, it is important that you calculate your effort rate and whether you will be able to pay it, as the wconsequences of not paying a loan will impact your life. Find out, then, what happens if you enter into credit default.

6 consequences of not paying a loan


Be on the Banco de Portugal blacklist

The so-called Banco de Portugal blacklist is a database that gathers information on loans taken out in Portugal, and which contains not only the history of all persons (individuals or legal entities) who have used credit, but also the state where these loans are: if they are being paid, if they have already been settled, if they are in arrears or if they even had to be renegotiated or written off from assets.

If you default, your name will be compromised in this database. This means, among other consequences, that you cannot take out other loans until you meet your obligations.


Having difficulty finding a job

Not being able to take out a new loan is just one of the consequences of not having your name on the Banco de Portugal blacklist. You may also experience difficulties when finding a job, as some employers may ask to see a candidate’s credit history. This is, therefore, another important reason for trying to negotiate a new payment method before defaulting.

When you incur a default situation, the advice is to immediately try to renegotiate the debt with the bank, to find a new solution, a new chance to settle the debt.

Your bank or credit institution cannot guess the reason for failing to pay the installments and may, therefore, just assume that you do not want to pay, and incur legal actions.

Default interest is a charge that will arise with late payment. The amount payable will be equal to the monthly installment plus default interest and a commission.

Remember that, in the case of debt to financial entities, this surcharge cannot exceed 3%. Learn in this article how to calculate the interest on arrears on debt:

See too
Interest on arrears: what they are, when they apply and how they are calculated


Stay with salary

When there is already a case in progress in court, the attachment of your monthly salary may be ordered. The attachment of the due date, or part of it, runs until the debt is settled. Wages below the national minimum wage on the date of the decision cannot be pledged. However, remember that the bank account can also be seized when the customer defaults on credit obligations.

If it is a case of non-compliance with payments on mortgage loans, the worst consequence of not paying a loan is handing over the property to the bank, if this is a mortgage loan.

What to do to avoid non-compliance?

If you realize that there is a high possibility of defaulting, contact your bank. There are mechanisms and supports that can help you avoid this situation.

State your case, show your budget and, above all, show that you want to continue to meet your financial obligations. They will certainly find a solution that can go through the renegotiation or consolidation of their credits.

Article originally published in February 2018. Last updated in February 2023.

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