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This is what happens when you stop paying money that you owe, usually repayments on a loan. If you miss a payment or two, you are known as being delinquent, but if you miss three or more payments then you are typically said to have defaulted. What can happen next is that whoever lent you the money usually has the right to repossess the thing you borrowed money to buy, like a car or a house. If it's a house, the lender will probably have the right to foreclose on the property. If you are having a temporary money problem, the lender might discuss it with you, and maybe agree to postpone one missed payment as long as you get back on the repayment schedule. The lender may even restructure the loan to make it more manageable to pay back. This restructuring is often called a "loan workout." Companies can default on loan repayments, too - for example, their bond payments to bondholders. When companies default, a great deal more money is usually at stake, but it's the same basic cause: they are unable to meet their debt obligations. Note that the Servicemembers Civil Relief Act may provide some protection against the consequences of defaulting for members of the armed services when on active duty.