What happens when you default on a loan from Avant

Online lender Avant offers personal loans ranging from $2,000 to $35,000 at interest rates from roughly 9.95% to 35.99% APR, though rates and availability vary depending on the state you live in and your creditworthiness. Here’s what happens when you default on a loan from Avant.

While Avant posts positive customer reviews on its website and claims 95% customer satisfaction in a recent survey, it averages only one and a half stars out of five from 93 reviewers on its Better Business Bureau profile. It has 195 complaints with the BBB and an A- rating. The company also recently settled charges with the Federal Trade Commission that it engaged in “deceptive and unfair loan servicing practices, such as imposing unauthorized charges on consumers’ accounts and unlawfully requiring consumers to consent to automatic payments from their bank accounts.” The upshot of the settlement was that Avant was fined $3.85 million, which will be returned to customers who were harmed by Avant’s unlawful practices.

Related article: Online lenders often collect debt differently than traditional banks. Here’s what to consider

What if I become delinquent on my Avant loan? Will Avant sue me?

If you have an Avant loan and you’ve fallen behind on payments, keep in mind that online lenders differ in practices from banks and credit cards, but also that Avant differs from its online competitors in four basic ways:

1. Avant may report your account after just 4 months of nonpayment

Online lenders like Avant can charge off a delinquent account after 120 days of nonpayment. This means it can report your account as a loss after just a few months of missed payments, hurting your credit. So if you’ve begun to miss payments, it’s important to come up with a solution quickly.

Related article: What does it mean to have my unpaid debt charged off?

2. Avant likely won’t sue you or sell the debt

Some online lenders shy away from suing borrowers for fear of tarnishing  their reputation. Instead, they sell charged-off accounts to debt buyers. That’s not the case here, though.

“Avant doesn’t sell right now,” said Michael Bovee, co-founder of Resolve, a company founded to help people in financial distress. “I also don’t see them litigating much right now.”

3. Avant may settle the debt, but make sure to get it in writing

While Bovee said that Avant’s settlements tend to be fairly good, he reminds clients to get agreements documented. “I advise everyone to be very careful to get agreements in writing before giving them a penny,” Bovee said. “Avant’s collection side talks a good game, but watch your back because I have seen them renege on stuff. If it’s not in writing, it’s not a deal.”

4. Avant may lower your interest rate via a debt management plan (DMP)

Unlike other online lenders, Avant will offer interest rate concessions to allow its accounts to be included in a DMP, research by Cambridge Credit Counseling has found. 

“Prosper, Lending Club, SoFi and Avant accept payments [through a DMP],” said Christopher Viale, Cambridge’s president and chief executive officer. “But no concessions from Lending Club, SoFi and Prosper. It appears Avant is willing to work on interest reduction a bit, but it is case by case.”

What are my payment options with Avant?

You may have other options if you are having trouble repaying your loan. If you contact Avant before you fall behind on payments, you may be able to work out a hardship plan that allows you to reduce your monthly payments for a period of time. Avant’s website clearly states that you can email them at payments@avant.com, or call at 844-240-4539, to talk to them about payment options.

If you are successful discussing a payment plan option, make sure it fits in your budget and that you are confident you can make all the payments. If you aren’t, it may be time to consider negotiating to settle your loan balance for less than what you owe. Of course, you need to be able to come up with some money to reach an agreement. Can you accumulate money from monthly cash flow and other resources in order to raise a portion of your current balance? In other words, if they theoretically accept a settlement of half of what you owe, could you find the money? 

If you can’t afford a debt payment plan or a settlement, it may be time to consider bankruptcy. While many people try to avoid it because of the stigma and the negative impact on their credit, there are times when it is the best option. If you’re approved for Chapter 7, you can eliminate all of your unsecured debt, including your personal loan from Avant.