I'm a economist so I can answer this one. When a government defaults it means that it can no longer pay its debts, what may follow is statement by the government about their inability to pay its debts fully or partially.

As a Latinamerican I have seen this a lot in my region, specially on my country. Back in the 1980's most of the region went through a sovereign default, this decade is known as "La década perdida". A little context is required here, back in the 60's and 70's, most governments in the regions thought it was a good idea to start substituting their imports with national products. In order to do so, they started a process of industrialization. They idea was good in paper, they would borrow money from abroad and invest it in the national industry, which in return would create the revenue necessary to pay the debt. Corruption and military coups caused this experiment to fail, along with the oil crisis of 1973 which led to the economic crisis of the 70's. Europe and USA increased their interest rates, thus affecting Latinoamerica (LA).

During the 80's, the financial burden of the debt was to heavy for the countries in LA, the dollar appreciated against the local currencies, making even harder to repay the debts. This also had an impact in the internal market, rising rates of dollar increased the prices of imported goods causing a rising inflation in many countries. Mexico was the first to default and announced that it would wait 90 days to resume the payments. This raised suspicion among commercial banks who stopped lending money to LA. Most of the region was shocked by this, with rising inflation and deteriorating living standards, most of them had to abandon the experiment of industrialization and follow the Washington consensus.

But one country had it worst than most: Bolivia. During the 70's the country was under military rule, a very incompetent one, but things looked well because raw materials prices were high, but as soon as they fell and commercial banks were less willing to lend money things started to go south. When things started to look bad military rulers stepped aside to allow civilians take back control. However, the country was already in the path to disaster. The country had no national industry besides raw material extraction, inflation was rising, living standards were deteriorating, there was public unrest and no one was willing to lend money to the country. It was a matter of time before the country defaulted. The new government was unable to address the problems and defaulted in 1985. By this point annual inflation had reached a peak at 20.000%, but after this it reached a new high of 60.000% annual. Like the rest of the region, Bolivia had to stick to the Washington Consensus and abandon the industrialization project. Also embraced shock therapy in order to fight back problems.

Consequences were huge and still can be seen in modern Bolivia. Inequality skyrocketed, many mine workers lost their job a were relocated to El Chapare were they turned to the only business that still made money: Drug Trafficking, the country went back to depend on the exports of raw materials and income per capita reduced sharply. There were political consequences as well, left populist politicians gained support among all those who were affected by the reforms, the political elite of the 80's and 90's is still seen today as traitors by the lower income class and inflation is still a taboo among people. This is also visible in the rest of the region, most of the countries had to resign their sovereignty in order to address the economical turmoil, in La case it had to allow the IMF and USA to dictate their economic policies. That's why denouncing and attacking American Imperialism is very effective for politicians in the region.

References:

Sachs, Jeffrey D. "The Bolivian hyperinflation and stabilization." (1986).

Klein, Naomi. The shock doctrine: The rise of disaster capitalism. Macmillan, 2007.

Morales, Juan Antonio, and Jeffrey D. Sachs. "Bolivia's economic crisis." Developing country debt and the world economy (1989): 57-80.

Edit: For those who say Sachs is not a good source, it is fair to point that, however, you must understand that this topic is still taboo in Bolivia and exploited for cheap political gains. Sachs as an outsider is a good starting point to talk about it, certainly he played a major role in this events and often tries to hide the fact that the Bolivian economic recuperation was heavily reliant in repression of those who opposed the measures. It is a good starting point, and you will get a pretty good picture if you also read Naomi's book, there she tells you the other side of the coin.

Edit 2: The Washington consensus was a "recipe" of policies that allegedly would solve the problems of the region. Most of them were clearly neoliberal, like reducing public expending and liberalization of trade. Again, most of the aimed to take advantage of the countries that were prescribed with such recipe.

Edit 3: I guess this post is receiving a lot of attention, if you are interested in reading a little of economic history of Bolivia DM me, I have a 9 pages essay about this topic that was never published but I could share with anyone who wants it.