I am going to take you on a journey of unpaid bills. Creditors are not simply going to ignore your debts. They will eventually come back to haunt you one day, so le me show you what happens when you do not pay.
Firstly, your account (we will assume this is a credit card) will fall 30 days past due. This is not too much of a problem. You will get charged a late fee and you might get a courtesy call from your bank reminding you to pay your bill. You will also notice a little ding on your credit report. Depending on the bank, your account also might see a dramatic spike in the interest rate. If you continue not to pay your bill, your account will fall further into delinquency. This means that you account will be about 60 days past due. This definitely shows up on your credit score and it will have an even bigger ding in it. You will be charged more late fees and your interest rate, if it hasn’t already gone up, is going to definitely rise. You will be getting more and more calls from your bank asking you why you are not paying.
If you continue to ignore your bill your account will fall into 90 days and then 120 days delinquency. It is in these stages where your bank is really going to try to get you to pay. They will stop asking you for the full amount and they will try to get you to pay just a little bit. You will get charged even more late fees and more interest. You should know the banks numbers by heart on your caller ID by now and your mailbox and email inbox are probably littered with programs of re-payment.
Continuing to ignore your bill will put your account into pre-charge off. This means that your bank is likely going to start offering you settlements. If you pay %50 of the total balance, the bank will forgive the rest. More late fees and more interest will accrue, adding to the total balance due. It will surprise you how quickly the balance amount will rise. From here your account will be sent to an outside collection agency. Outside agencies are not nearly as nice as your bank. They will call multiple times a day, even if you order them to cease calling. You might even see a representative showing up at your door.
The last stage is where your lender gives up. But not completely. They will stop asking you to repay your debt. There will be no more phone calls, no more letters, no more offers of settlements. Everything will stop. That is, until you see a notice that they have put a lien on your house. After you sell your house or die, the proceeds of your mortgage will go to pay for the bill you ignored for so long and you will receive the remaining amount, if any.
You will not go to jail, you will not be sued (at least not in the typical fashion that you think of) and they will not garnish your wages. If you ignore your bills long enough, you will have a lien on your house that will be repaid after you die.
Moral of the story? Pay your bills on time so you can keep your house!
For more information on personal finance, credit counseling, wealth building, investments, and making money, please see the recommendations page of my website at http://www.dianathecreditcounselor.com/index.php?p=1_5_Recommendations and click on one of the tools that will help you gain better financial freedom.
And as always, may you have happier financial days ahead!
Diana E. Jones
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