Can't pay a personal loan? Take these 6 steps

With a dose of diligence and a dash of creativity, tardy borrowers can catch up on their personal loan debt.

With interest rates down and many Americans looking to consolidate household debt into one straightforward payment, personal loans are quickly becoming an “in demand” consumer finance tool in 2020.

Data from shows that 114.4 million Americans took out a personal loan between February 2019 and February 2020. Almost one-third (31.8%) of those borrowers took out a personal loan to consolidate debt, while 21% used personal loan funds to renovate their homes.

Whenever you're considering taking out a personal loan or a refinance, turn to Credible. Credible can show you rates starting at 4.99% APR with loan amounts from $600 to $100,000 available. Click here to browse your options.

Of course, taking out a personal loan and paying it back are two different subjects – with the “personal loan payoff” part a more demanding scenario.

“We often find borrowers who fall behind on personal debts are living outside of their means and trying to keep up with a lifestyle that their income cannot support,” said Francis Collins, senior vice president, credit administration at Teachers Federal Credit Union, in Hauppauge, N.Y.

The financial damage accumulated when a borrower can’t pay a personal loan goes beyond the stress of missed payments. “You'll not only rack up late fees but also run the risk of damaging your credit score and having debt collectors barrage you with their incessant calls,” said Matt Rostosky, owner of Cashofferkey, a real estate investment firm in Louisville, Ky.

Getting square with personal loan debt

If a borrower is truly stuck and cannot pay off a personal loan, what recourse is available? Actually, several remedies are in play – with these loan management solutions at the top of the list.

  1. Contact your lender immediately
  2. Make a list – and make a repayment plan
  3. Get some good financial help
  4. Ask about loan payment deferment
  5. Talk to a credit counselor
  6. Refinance into a lower-cost personal loan

1. Contact your lender immediately: Don’t let a monthly bill go unpaid without having a word with the personal loan lender.

“If you get in trouble with a personal loan, contact your lender and see if they can work out a forbearance or restructure the agreement,” said Juan Carlos Cruz, founder of Britewater Financial Group, in Brooklyn, N.Y. “Lenders may be able to take a portion off of the monthly payment and add it to the back of the loan in arrears. Approval, conditions, and new payments will have to be determined by the lender.”

If you're looking for more information about personal loans or you're considering taking out another loan, use a marketplace like Credible to save some time by comparing rates from top lenders.


2. Make a list – and make a repayment plan: At Teachers Federal Credit Union, Collins advises that his customers make a list of all personal debt, including the balance of the debt, interest rate, and terms.

“List out available assets to pay down the debt, including equity in your home, if available,” Collins said. “Then, start to plan a method of paying off the debt, which may include taking out a low-rate personal loan or home equity loan for consolidation.”

“If those options are not available to the consumer, they should start to tackle the highest interest rate debt first by making payments above the minimum required,” Collins added. “Paying down high-interest rate debt first will expedite the process.”

3. Get some good financial help: When a borrower is having trouble setting a plan and catching up on their debt, Collins recommends speaking to a financial professional and seeking assistance.

“Your local credit unions often have partnerships with financial wellness companies who work with borrowers to set a debt management plan and provide a path to financial relief,” Collins said.

Credible can also offer advice regarding your personal loans. To simplify your loan process, head to Credible's website, where you can answer a few simple questions and receive real rates — not estimates.

5 DIFFERENT TYPES OF PERSONAL LOANS YOU SHOULD CONSIDER4. Ask about loan payment deferment: If a borrower’s financial struggles are temporary – and a missed payment or two is the reality - ask the lender about temporary loan payment deferment.

“If it’s a short-term situation, they might be willing to defer the repayment for a month,” said Anna Serio, a commercial loan officer at, a personal financial management platform. “Many lenders are also offering long-term deferment to people who have been affected by the coronavirus.”

“Plus, preemptively going into deferment or forbearance can actually work in your favor when applying for credit in the future - it shows that you were on top of your finances and acted in the best interest of yourself and your creditor,” Serio said.

5. Talk to a credit counselor: If it’s too late and the personal loan is already delinquent, consider signing up for a session at a nonprofit credit counseling agency.

“Your credit counselor will go over your finances, pinpoint the source of the problem and work with you to come up with an action plan to get out of debt,” Serio said. “Just make sure it’s a nonprofit agency — these typically offer credit counseling services for free.”


6. Refinance into a lower-cost personal loan: With interest rates down, refinancing into a personal loan with a lower interest rate can save money and provide some other advantages, as well.

“Getting a new personal loan via refinancing will give you extra time to repay your debt,” said Rostosky. “That allows you to make up for the missed payments in an efficient manner.”

Personal loan consumers can find multiple personal loan refinancing options – including refinancing a mortgage loan to free up more money - at There, loan borrowers can compare loans and rates and get approved in just a few days – or sooner. Personal loans are quickly becoming an “in demand” consumer finance tool in 2020.