Delinquency refers to primarily an individual (but also conceivably an entity or business) failing to make good on what was expected of them according to their duty or the law. It often pertains to failing to affect the minimum due payment or carry out a fiduciary responsibility. An individual who practices Delinquency is called a delinquent. These persons have contractually undertaken obligations to turn in payments on loan accounts according to a pre-arranged routine deadline.
This might include minimum monthly amounts of money owed on a car payment, a credit card payment, or a mortgage payment. As the individuals do not make these payments on time, they become delinquent. When mortgage holders become delinquent, the financial institutions holding the loans are able to start working through foreclosure processes. They will do this when the mortgage account stays unpaid for a specific length of time.
There are many different types of accounts on which people fall into Delinquency. This could be retail account payments, income taxes, mortgages, lines of credit, and more. Individuals who become delinquent suffer the consequences for these financial actions. Such impacts vary with the kind of Delinquency, cause, and length of time it has continued in this unfortunate state. As individuals become late on credit card bills, they can be charged late fees. Those who do not make their required tax payments can have their wages garnered or even their bank account levied by the Internal Revenue Service.
Besides these financial Delinquencies, there are responsibilities which when they are not carried out can be labeled delinquent. By not carrying out one’s fiduciary duties, professional responsibilities, or other contractual obligations as set forth by custom or the law, individuals can be called delinquents as well. Police officers who do not professionally carry out their responsibilities to protect ordinary citizens in the line of duty can be found to be delinquent.
It is important not to confuse Delinquency with default. Individuals are officially delinquent at the point when they miss making a required payment of some sort in a timely fashion. By contrast, loan defaults happen as borrowers do not pay back a loan according to the terms on which they agreed to in their original contract. Loans can stay in the delinquent stage without being treated as in default for an unspecified amount of time. The amount of time this remains delinquent rather than in default varies considerably from one creditor and financial institution to another. For example, with student loans, the United States’ Federal Government permits these to be fully delinquent for as long as 270 consecutive days before they become considered to be in default.
The U.S. keeps track of its various national Delinquency rates. Per the year 2016 in the fourth quarter, such Delinquencies amounted to 4.15 percent for real estate loans on residential loans, 2.15 percent on loans for consumer credit cards, and .85 percent for real estate loans on commercial loans. The government also maintains official statistics for these rates by year of loan issued. For 2016, this amounted to 2.04 percent, which was near the historically typical average.
The devastating global financial crisis and U.S. mortgage crisis which erupted in 2007 caused the rates to spike to a high in the Great Recession years which reached fully 7.4 percent in the year 2010 in its first quarter. For residential real estate, the rate topped out at 11.26 percent for these specific types of loans. Up to the year 2008 in its second quarter these Delinquencies had not been higher than three percent all the way back to the year 1994 in its first quarter.