What happens when a loan defaults (for borrowers)
No one takes out a loan expecting to default. But if your circumstances change and you’re unable to meet your agreed loan repayments, it’s important to know what happens next — and how FOLK2FOLK will approach the situation.
We aim to take a fair, human approach to supporting our borrowers, while upholding our responsibility to our investors.
What does default mean?
A default typically occurs when you fail to pay the interest due or repay the capital at the end of the loan term. In some cases, default can also be triggered by other events such as breaching loan terms or insolvency.
We assess each situation individually and take a practical, supportive approach before any formal enforcement steps are considered.
Will I be informed?
Yes. If you miss a payment or your loan term ends without repayment, we will:
- Contact you promptly to understand the reason
- Work with you to explore options
- Keep communication open and transparent
We’ll always try to reach a resolution before taking further action.
What options are available?
If you’re experiencing financial difficulty or delays, we may be able to work with you on a short-term arrangement, such as:
- A revised repayment plan
- A short extension to your loan term
- A voluntary sale of the security property
- Support in seeking refinance through another provider
Any agreement is subject to credit review and must be in the best interest of our investors.
What if resolution isn’t possible?
If it becomes clear that a resolution can’t be reached, we may move to enforce the security provided. This could involve:
- Appointing receivers to manage the secured property
- Selling the property to recover funds
- Using proceeds to repay investors and cover costs
How to avoid default
If you’re facing challenges, the earlier you talk to us, the better. We may be able to help you avoid default altogether.
