When signing papers for a loan, make sure to
check for an acceleration clause. This clause is what lets
the lender accelerate your payments if you become delinquent on
the loan. This clause is common in many written
agreements. How it works:
You sign a contract with a bank for a loan of
$12,000. The terms of the loan are that you pay the bank
$200 a month plus 5% interest for 4 years. You make
your payments regularly until you lose your job and miss two
payments. At this point, the bank may send you a letter
saying that you are in default on the loan and that it is
accelerating future payments. You now immediately owe the
full amount of the loan plus interest that is due. If
there is an acceleration clause in your loan contract, then it
is legal for the bank to do this.
There are ways to fight an acceleration clause -
primarily by bringing delinquent payments up to date. The
bank receives what is due and will still receive interest on
your future payments, which is how it makes its money.
If you have received a letter from a lender
accelerating your loan payments, contact
us. We may be
able to help. We can put you in touch with an affordable
contract lawyer in your state. Our rates are very
reasonable.