What if I don`t pay back a collateral loan?

[BuildingonUp]

Okay so in Nov. I received a check in the mail from a loan company and I went ahead and cashed it because at this time I was behind on bills and it helped me greatly. I was caught up in everything and thought it was a blessing from God. Up until February, I made all of my payments on time then I got terribly sick with pneumonia and had to move back home, to another state with family. After getting sick and having to move, I no longer had a job. So I have not made a payment since February 1. Well I tried to explain to them that I had gotten sick and promised to pay them back as soon as I was back on my feet. I was fortunate to receive a job here in my home state but will not get my first paycheck for another 3 weeks. They call me everyday threatening to take it to the authorities because I left with collatoral without getting written consent from them. My collatoral was my tv and my tablet which I sold in order to afford to get out here. I am so scared that they are going to take everything I have (my work checks) or even my car that my grandparents put a down payment on for me in order to get to work. What can happen? I have no intention not to pay them back, part of my first paycheck will go to them but they just won`t give me the chance. They won`t understand that I had gotten really sick and had no choice but to move. What can happen? What if they take me to court? There is just no way I could make it all the way back there at this point in my life. 

[Revelate]

It's typical tactics, but if you can't pay right now you can't pay right now.  Selling the collateral might be a big no no according to their terms, don't know on that.  If you haven't told them already that you've sold them, I wouldn't.

If they report to the bureaus you're likely going to get a couple of lates on the credit report, at least a 60, maybe a 90 or 120 depending on how long it takes you to get caught up.  Also interest will continue to accure, and penalities will likely be tacked on.

They're *really* unlikely to take you to court at this point, and depending on how much the loan is for (if your collateral was a TV I can't imagine we're talking more than a few thousand); simply make as much of a payment as you can and try to get righteous as quickly as you can.  Alternatively if you have a good relationship with your parents / grandparents, you could see about trying to get a loan from them potentially to catch up with the company now... though under absolutely no circumances can you afford to flake on a family loan, and absolutely make it legally enforcible (promissary note, signed, whole 9 yards... is pretty simple just check nolo.com for examples).

If you talk to them keep explaining the situation: and be clear with them when you get the first paycheck.

If it does wind up going to court for some stupid reason, have your records in line, and let the judge sort it out... but if you can make any sort of payment in the near future, the odds of their going to court over it is utterly remote: it costs money to go to court, and for the dollar amounts involved it's likely not worth it for anything except for a last resort which neither of you should be at currently.

[RobertEG]

I would at least have an initial consultation with an attorney.

[fezwhy]

First take a deep breath.   These things happen.  Get some money saved up call them up to arrange payments again.

The sooner you resolve this the quicker you can get things turned around.   If you have to wait a month to get caught up then do that only you can know where your finances are at.  With all the lates your credit score is probably going to take a hit.