What happens if a debtor does not pay by the specified due date?

If a debtor does not pay by the specified due date, fees and penalties may be assessed as a consequence. This serves as a deterrent to encourage timely payments and to compensate the lender or creditor for the additional costs associated with late payments. Penalties might include late fees or a higher interest rate applied to the remaining balance, which can increase the overall amount the debtor will need to repay. This approach is common in debt management practices, as it reinforces the importance of adhering to payment schedules and helps maintain the financial stability of creditors.

The other options do not accurately reflect standard practices in debt management. For instance, a debtor receiving a credit reward would not typically occur in the context of missed payments, while debt forgiveness is generally not an automatic consequence of failing to pay. Similarly, interest rates would not be lowered due to missed payments; rather, they might increase as a result of the delinquency. These practices underscore the necessity of making timely payments to avoid financial penalties.