Having debts to pay off can weigh on you, and it’s one of the most difficult financial issues that you can deal with. When your debts are affordable, you might not think about them much. Maybe you have some student loans, or you took out a personal loan for some home renovations. But when you’re unable to pay off your debts, or you’re just thinking about maybe not bothering, that’s when you can experience problems.
If you don’t pay your debts, it can have a number of serious consequences. Here’s what might happen if you start missing payments or even miss just one payment.
Contact from Collectors
The first thing that lenders will do if you don’t make a repayment is to start contacting you.
The longer you leave it, the more they can start to call you, send you letters, and even try to talk to your friends and family. They might use third-party collections agencies to help them get their money. This can all be very stressful, especially when you don’t have the money to pay your debts.
However, ignoring the problem won’t help. The best thing that you can do is talk to the people that you owe money to, and see if you can work something out.
Effect on Your Credit Report
Missing just one payment for a debt can have an effect on your credit report.
When you miss a payment, debt collectors will report it to the main credit bureaus. This will then affect your credit score for months and sometimes years.
However, it’s not too late to fix it, even if you have missed a payment. A paid collection notice isn’t quite as good as not having one at all, but it is better than having an unpaid one leaving a black mark on your credit report.
Impact of Credit Report Marks
If you have marks on your credit report indicating that you haven’t paid your debts, this can affect your future in a few different ways.
Lenders will be warier of you, so it can be more difficult to get credit in various forms, from credit cards to mortgages. When you can secure credit, you could find that you will have less favorable interest rates to choose from. A poor credit score can even have an impact on where you can live.
Finding somewhere to rent can be tougher, as landlords and property managers will often check your credit report.
Possible Legal Problems
When you let the issue go long enough, you could end up dealing with a lawsuit after not paying your debts.
Collectors can sue you for what you owe, and they might even be able to have your wages garnished. If you do receive a court summons, it’s imperative that you don’t ignore it. It won’t make the problem disappear, and you’ll end up having to pay what you owe. By attending court, you might be able to get yourself a better deal.
Not paying your debt could mean that you end up suffering the consequences. If you think you’re not going to be able to make a payment, it’s best to try and find a solution as soon as you can, instead of burying your head in the sand.