1. Your default in making payment makes you liable to legal action for recovery by the financial institution. When you take loan, you have a contract with the bank/financial institution to repay it, as per the terms and conditions agreed upon. If you do not make payment to the bank/financial institution then it will first issue you a legal notice and ask you to make payment. If you still fail to do so the bank/financial institution will start a recovery proceedings against you which does not take much time. Moreover the mortgaged property can be got auctioned to recover the arrears. 2. Any default continuing for 3 months or more is treated as the non-performing asset of the banking/ finance company. The matter gets reported to the CIBIL, as defaulter/ bad debtor. That affects the credit rating of the defauter, which becomes hurdle in getting further loan from any bank/ finance company. So, to avoid bad credit rating by the CIBIL, my advice is to better repay the loan somehow or the other and or get it re-scheduled.