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The Dangers of Not Paying Your Debts on Time
If you are not able to pay your debts on time, it can have a significant impact on many aspects of your life. Aside from the stress that it puts you and your family under, not being able to make repayments can badly affect your credit score and may even eventually result in you losing your job or your home.
When we get into financial trouble, we can sometimes deny what's going on and hope that the problem will just go away. Unfortunately, ignoring these kinds of issues never works. This short article explores what happens when we don't act to pay our debts and explains that we should contact lenders as soon as possible to work out repayment options.
Here is an example of what can happen if you're not able to pay your debt on time, as things escalate:
- Your lender or financial institution will send you a notice that you are late in paying your bill
- Interest or a finance charge are added to the amount that you owe
- Late payments or a lack of payments will be reported on your credit history by the lender; this will impact your credit score, making it more difficult for you to get loans in future
- The outstanding amount is passed on to a debt collection agency by the lender
- The debt collection agency will start sending you debt collection requests and calling you to demand payment
- You may get offers for debt settlements from the debt collection agency
- Depending on how much you owe, you may receive a court summons to appear in court
- There may be demands made directly against your wages or income by court order so that the debt is repaid
- You may have difficulties finding or keeping your employment if there are checks made on you to a credit scoring agency; this may be particularly true if you have to file for bankruptcy or your wages are garnished for repayment
- If you lose your job, you will find it difficult to keep up with other bills, including mortgage payments
- You receive demands from your mortgage lender to settle the outstanding amount owed, which is secured against your house
- You may receive a foreclosure notice on your house
- You may receive lowball offers for your house that you could be forced to accept
- Your house is foreclosed on and you have to move out
Tips on Debt Relief and Your Credit Score
Get in touch with your lender
You can avoid almost all of these issues by getting in touch with your lender as soon as you realize you may not be able to make a repayment. Give them a call and explain your situation to them. Most lenders will be happy to work out a reduced or deferred payment schedule, as long as they get their money eventually.
Don't be afraid to speak with your lender - It's better to have the conversation now and stop things getting worse than doing nothing and hoping the problem will go away.