What Does Payment Deferred Mean?

Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Debt Collection Lawsuit Flowchart

Summary: A payment deferred means that a creditor and debtor have agreed to a later date for payment. It can be a practical option for those who are experiencing financial difficulty and need to delay payments. Learn more about the pros and cons of deferred payments.

A payment deferred means an arrangement where a debtor is allowed to make a delayed payment or payments for an established time period. This can be helpful for those experiencing unexpected financial difficulties due to job loss, medical issues, or unforeseen expenses that have caused temporary financial hardship. It provides temporary relief from debt repayment. However, it usually comes with additional fees and interest charges.

Deferred payments are common for numerous types of loans. Some of the most common loans that often offer a deferral option include:

Mortgage loans
Student loans
Vehicle loans
Insurance when an employee is unable to work for a period of time
Credit cards
Some types of store cards

When a deferred payment plan is used on a mortgage or student loan, it is typically referred to as a forbearance. On other types of loans, it is usually referred to as a deferred payment arrangement.

Regardless of the type of deferral, it is crucial to carefully review the terms and conditions before agreeing to deferred payment arrangements. In this article, we’ll explore the possible effects of deferred payments and their pros and cons.

Sued for debt? Settle the debt once and for all with the help of SoloSettle.

Settle with SoloSettle

Make an Offer

Does payment deferment harm your credit score?

Payment deferrals are a type of forbearance on debt. If you find yourself temporarily unable to pay a debt on time, reaching out to discuss arrangements for deferred payments quickly might increase the likelihood of a lender working with you before your credit score suffers a negative impact from late payments. Depending on the type of loan, and the creditor, they may allow decreased or delayed payments for a specific time period—usually no longer than 12 months.

Unlike a missed or late payment, a payment marked “payment deferred” on your credit history counts as “paid as agreed” and does not hurt your credit score. However, it is important to understand that payment deferrals are not retroactive, so waiting until you’ve already missed one or two payments before seeking a deferral can do substantial damage to your credit.

The pros and cons of deferred payments

Don’t make the mistake of thinking of deferred payments as free money. Depending on the arrangement you make with the creditor and how long and how much you defer, seeking a payment deferral is likely to cost you more on the overall costs of your loan.

In the following table, we’ll review the potential pros and cons of deferred payments.

Pros and Cons of Deferred Payments
Pros	Cons
Deferred payments do not hurt your credit score.	Interest continues to accrue while payments are deferred.
Deferring payments can buy you time to overcome short-term financial obstacles.	Deferments add to the overall length of the loan in most circumstances.
The creditor may waive late fees during the deferral period.	Some creditors apply late fees.

Now, let’s take a look at an example of a payment deferred.

Example: Kayla is having difficulty paying her student loans. The deferred payment program allows her to defer principal and interest payments for up to 12 months. During the 12-month deferment, interest accrues on the unpaid balance of $30,000. At the end of the deferment, Kayla will have to make principal and interest payments, including payments on the interest accrued during the 12-month deferral.

Whatever loan you have, it is worth reaching out to the creditor before you miss a payment to see if an option exists to defer one or more payments.

Options to avoid deferred payments

Deferring payment is not always the best option. If your financial situation has changed dramatically, reaching out to defer payments is likely just a way to kick the can down the road without solving the underlying issue. SoloSuit can help you find long-term solutions to your debt problems with its host of tools and information.

If you’ve accrued debt that you cannot pay, SoloSuit’s SoloSettle tool can help you reach out to creditors in a good-faith attempt to settle the debt for less than you owe. A payment deferred is a short-term solution that does not solve the underlying problem if you are drowning in too much debt.

However, settling your debt or forcing creditors to validate the debt through a Debt Validation Letter offer long-term solutions to taking control of your finances and restoring your financial well-being.

To learn more about debt settlement, check out this video:

What is Solo?

Solo makes it easy to resolve debt with debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt. SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

SoloSettle can help you contact your debt collector or creditor and negotiate the debt to settle for less, all online. It simplifies and streamlines the process to settling your debt.

No matter where you find yourself in the debt collection process, Solo is here to help you resolve your debt.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Debt collector guides

Are you being contacted by a debt collector? We’re making guides on how to resolve debt with each one.

Arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Bankruptcy

Bankruptcy is a great way to legally resolve debt, but it's usually best to consider it as a last resort. Here are some bankruptcy guides to help you decide which debt resolution option is best for you.

Check your case status

Don’t have time to go to your local courthouse to check the status of your case? We’ve created state guides on how to check the status of your case throughout the US, complete with online search tools and court directories.

Credit

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt, along with other credit-related resources.

Debt collection FAQs

Find answers to some of our the most commonly-asked questions about debt collection below.

Debt collection documents and templates

If you're dealing with debt, these documents and templates will help you respond, protect your rights, negotiate, and resolve your debts.

Debt relief

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt settlement

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created state guides on debt settlement. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

Eviction

Facing an eviction? The following guides will help you navigate your situation with confidence.

Federal debt collection laws

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Legal aid

Helping people find access to justice is at the heart of Solo's misison. If you're dealing with a legal debt issue, the following guides will help you through it.

Medical debt

Having a health challenge is stressful, but dealing with medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Personal finance

Learn how to manage your finances and overcome crushing debt. Check out our personal finance guides below.

State debt collection laws

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote guides on each state’s statutes and more.

Stop collection calls

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Wage garnishment

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in your state, plus other wage garnishment resources.

The Debt Hotline

Hosted by Team Solo, The Debt Hotline breaks down debt and personal finance topics with help from attorneys, financial experts, and industry pros. We respond to real questions to help you navigate debt with knowledge and courage.

Other debt resources

It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.

"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather

Get Started