> ## Documentation Index
> Fetch the complete documentation index at: https://docs.matocard.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Defaults

> What happens when a cycle is not repaid in time.

## When

A cycle can be defaulted once it is past its **due date plus the grace period** (30 + 3 days). Anyone can call `markDefaulted(user)`; it does not depend on Matocard being online.

## What happens

1. Collateral shares worth the debt, rounded up, are **seized into the lender pool**. Shares are seized, not redeemed, so this is instant even if the vault's withdrawals are queued.
2. The debt is written off.
3. **Everything above the debt stays yours** to withdraw.
4. The default is counted as a cycle with no repayment, which lowers the score, and stays on the public record.
5. The account can **never draw again**, and the identity behind it cannot open another account.

## If the collateral is not enough

Above score 72 a limit can exceed collateral. If such a borrower defaults, all their collateral is seized and the shortfall is written off against the lender pool. That is the lenders' risk, and the yield fee is its price. See [Lender pool](/learn/lender-pool).

## What never triggers a default

* A fall in the vault's value.
* The contract being paused. Repayment is never paused, and `markDefaulted` keeps running, so a pause neither traps anyone nor extends a due date.


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.