What Will Happen When You Don’t Pay Your Debts?

04
September

Having numerous sources of credit is great for when consumers have emergencies or frivolous desires. However, if a consumer is not careful, he or she can quickly sink into overwhelming debt. The cycle of generous credit offers and overbearing debt is a process that can catch up on a person very quickly. The consumer must always keep his or her eyes open and stay on top of payments. The consequences for not keeping up with debt can be very harsh. In fact, they can ruin a person’s standings for many years.

Amazing Credit Offers

When a credit card company approves a consumer for his or her first card, the consumer becomes a debtor. Creditors have decided to give that person money and trust that he or she will take the appropriate actions. The debtor is responsible for using the card wisely and making timely payments.

Once a debtor receives one credit card and makes one or two good faith payments, other creditors can see that person’s history on the consumer report. Usually, within a few months of receiving one card, a debtor will receive several offers for credit cards from other lenders. It is very exciting when a person receives an offer to apply for more credit. Not many debtors turn down visiting the websites and filling out applications. Therefore, many debtors end up with two, three, or four additional credit cards from new lenders.

The debtor will begin using these credit cards immediately. Debt racks up very quickly and before long, the individual accumulates a large amount of debt with various lenders. If that person does not have enough income to repay the loans and debts, he or she will miss payments. The downward spiral into debt trouble usually begins with one missed payment.

Failure to Pay Debt

Several things happen when a person misses a credit card payment. First, the credit card company attaches a late fee to the account. Late fees can be as high as $35 on some cards. Next, the credit card company reports the missed payment to the credit bureaus, which causes his or her credit score to deteriorate.

The credit card company will make phone calls in attempt to get the debtor to make payment. Meanwhile, the card continues to accumulate interest and other fees. Over the limit fees may accumulate if the debtor used all the funds on the card and receive a late charge. Fees add up very quickly, making it more difficult for the debtor to recover from the situation.

After a certain amount of days, the credit card company may close the card, write off the account, and hire a collections company to collect the entire balance owed on the credit card. Eventually the creditor will take the debtor to court. Additionally, the lender may receive a judgment from the courts allowing it to practice aggressive collections procedures such as freezing his or her bank account. The creditor may also attach a wage garnishment or seize the debtor’s assets.

Debtors who have more than one credit card could have this negative process happen more than once. It creates a serious financial problem that is not easy for any person to escape. The best recourse for someone in this situation is to seek debt relief help. Processes such as debt consolidation, credit counseling, bankruptcy, consolidation, and debt management can help a struggling debtor to bounce back. Additionally, credit repair companies can help people before the situation becomes messy. Debtors do not have to wait until creditors take them to court. The beauty of credit repair is that it is available for the debtor at any stage.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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