Taking out a loan, whether it's a mortgage or a personal loan, comes with a significant responsibility. Making your monthly payments on time is crucial to avoid serious consequences. But what happens if you can't repay your loan? Whether it’s a personal loan or any other type of consumer credit, here’s what you risk if you fail to make payments.

1. Registration on the National Bank’s Blacklist

One of the first consequences of failing to repay your loan is being listed in the Central Credit Register (CKP) at the National Bank of Belgium. This registry’s goal is to prevent excessive debt burdens and track defaulters. Banks are required by law to notify the CKP if payments are overdue, typically within eight days after a dispute arises, as long as the delay exceeds three months.

It’s important to note that this registration isn’t permanent. If you settle your overdue payments, the registration will be removed after a maximum of one year. However, if you don’t resolve your situation, the record can stay for up to ten years, which can severely impact your financial reputation.

2. Possible Seizure of Assets

If you fail to pay your loan, the lender has several options to recover the outstanding amount:

• Seizure of your guarantee: If you have provided a guarantee, such as a co-signer, the bank may use this guarantee to cover the debt if you miss at least two payments or if the missed payments exceed 20% of the total owed amount.
• Seizure of your salary: The bank can seize a portion of your salary, which typically involves informing your employer, who will then pay the specified amount directly to the lender.
• Seizure of property: In the case of a mortgage loan, the lender can seize the property used as collateral for the loan, potentially resulting in the loss of your home.

3. Loan Repayment Demanded in Full

If payments remain overdue for an extended period, the lender may decide to terminate the loan agreement and demand full repayment of the outstanding amount. This includes not only the remaining capital but also any unpaid interest and late fees. The interest on overdue payments can accumulate quickly, increasing the total amount you owe.

4. Repossession of the Object of the Loan

In some consumer loans, especially those with a retention-of-title clause, the lender has the right to reclaim the object purchased with the loan if payments are not made. This applies to mortgage loans, where the property itself can be repossessed if the borrower fails to repay the loan.

5. Amicable Settlement and Mediation

In some cases, the lender may be willing to reach an amicable settlement. This means they may agree to modify the repayment plan to better suit your current financial situation. A debt mediator can sometimes be involved to help both parties find the best solution, such as restructuring the loan into more manageable payments.

6. Possible Lawsuit and Legal Consequences

If the above measures don’t resolve the issue, the case could go to court. In the event of a lawsuit, the court may order you to repay the entire outstanding loan, including any interest and penalties. The judgment may even result in wage garnishment or the seizure of your assets, making the situation even worse.

7. Reduced Chances of Getting a New Loan

Another significant consequence of failing to repay a loan is the difficulty it creates in obtaining new credit. When applying for a loan, financial institutions check the CKP registry to assess the risk of lending to you. If your name is on the blacklist, it will be much harder to secure future loans, as you will be seen as a high-risk borrower.

Conclusion

Not paying a loan can lead to serious consequences, including legal actions, asset seizure, and negative impacts on your future ability to obtain credit. It is crucial to make payments on time and only take out loans if you are confident in your ability to repay them. If you find yourself in financial trouble, don’t hesitate to contact your lender or a debt mediator for assistance. Taking action early can help prevent being listed in the National Bank’s registry and avoid other negative consequences of defaulting on your loan.