Which term refers to penalties, a lower credit score, and potential legal action resulting from not repaying a loan?

• A. Bankruptcy
• B. Delinquent
• C. Deferrment
• D. Consequences of default

Answer: (D)

When you don’t repay a loan, the outcomes that follow are the consequences of default. This phrase covers the penalties you can incur—like late fees and higher interest—along with the impact on your credit score and the possibility of legal action to recover the debt. Lenders may also pursue collections or even lawsuits, which can lead to wage garnishment or liens in some cases. Because it describes the full range of results from failing to repay, it’s the most complete label for what happens after a loan goes into default.

The other options don’t fit as well. Bankruptcy is a specific legal process to relieve debts, not the single, universal result of default. Delinquent describes being late on payments, not all the downstream consequences. Deferral is simply delaying payments, not the fallout that comes after default.