What are the consequences of defaulting on a tenant loan?

Since the tenant loan is not tied to any particular piece of collateral, the lender cannot foreclose on anything directly. If you default on the loan, they will most likely file a lawsuit against you with the court system. You will then be required to appear in court to present your case. If the judge rules in their favor, your wages could be garnished, or you could be forced to sell some other piece of property in order to repay the loan. In most cases, the court will rule in the lender's favor because you signed the loan documents.

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