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What Happens If You Don’t Pay Your Debts On Time?

Updated on April 3, 2015
It's vital that you pay your debts on time so that you don't run into issues with your lender or the credit scoring agencies
It's vital that you pay your debts on time so that you don't run into issues with your lender or the credit scoring agencies | Source

There are lots of negative ramifications if you don't pay your debts on time. It is important to use your credit cards, overdraft protection, and make purchases wisely, so that you are not put into a situation where you are unable to pay your bills.

Unfortunately, if you continue to not pay your debts on time, you can be faced with possibly losing your home, or even your job.

Here's what happens if you don't pay your debt on time - in escalating sequence.

  1. You get a notice that you are late on your bill
  2. A finance charge is added to your bill if not paid in full
  3. Late fees are added to your unpaid balance
  4. Non Receipt of payments are reported on your credit report which will negatively impact your credit score as well as your ability to get loans or more credit
  5. Your bill is sold to a debt collection agency by the creditor
  6. You start getting debt collection notices and annoying calls from the debt collector
  7. You get offers for debt settlements from the debt collector
  8. Depending on the amount owed, you may get a court summons to appear in court.
  9. Your wages are garnished if the bill collector (usually a law firm, or a professional bill collecting company) is not paid or if payment arrangements are not made
  10. You are unable to get a job or you may lose your job (depending on the type job) if a background check is done and shows that your wages were garnished, that you filed bankruptcy, or show evidence that you are having problems paying your bills on time.
  11. You lose your job, and are unable to keep up with the rest of your bills -- which include your mortgage payment.
  12. You receive late notices when you are unable to make your mortgage payments.
  13. You receive a foreclosure notice from the bank that has your house mortgage, or an offer to help you make your mortgage payments when you are unable to pay your mortgage payment
  14. You start receiving offers for your house -- since once the foreclosure notice is publicized, people know you are in a financial crisis -- and the foreclosure predators come out of the wood work.
  15. You have to move out of your house since it has been foreclosed on. Depending on how much the house sells for -- you could still be liable for mortgage payments after foreclosure.

As you can see, it is very important to pay your debts on time. Even better, if you buy something on credit, try to pay the balance off quickly, to reduce the finance charges as well as to minimize the above negative actions happening to you.

Other impacts

It depends on the agreement that you originally had with your lender, but could typically include the following:

  • Paying a late fee
  • Impacting on your credit score (payments make up 35% of your credit score)
  • Making it harder for you to get loans in future

If you are having problems making a payment, contact your lender and explain the situation to them. See if there is a way that you can work out a more realistic payment schedule.


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