During hard times, it can be difficult to make ends meet. No matter what the cause, debtors still expect you to pay your bills on time. Eventually, they get tired of waiting and will soon start using heavier-handed means to try to get you to pay. The things that you can expect to happen will be different according to the kind of debts you have.
Home or Rent Debts
If you have mortgage or rent debt, you can expect more serious consequences. Right now, there is a moratorium on evictions and foreclosures until the end of the year. After that, unless a new Congressional bill is passed to stop it, you can expect to receive either foreclosure notices or an eviction notice if the court orders it. Paying all of your past due bills at that time may be required or you may be able to make a payment agreement to buy more time. Of course, you will need to be working to be able to make an agreement and you should be paying something each month now.
Credit Card Debts
Before debts are sent to a collection agency, you will start receiving annoying phone calls. It will usually take about 60 to 90 days after receiving no payments that the credit card company will do so. The collection agency will usually wait about 180 days before consider charging it off – which means that they will consider it a probable loss.
When a collection agency does not hear from you, they have several things that they can do. Their actions are limited by federal and state laws (which are much better now than they were before). After getting a written verification of the debt and the amount, you can ask the debt collection company to stop contacting you and they must comply. It will not eradicate your debt and it will not prevent the possible next step.
The collection agency will look to hear from you before taking the next step. If you contact them, you may be able to negotiate reduced payments or a lower interest rate. After making some payments, the company may send you a letter that will present a compromise. This may include an offer to let you pay half or more of the bill at once by a certain date, in exchange for dropping the balance.
Instead of charging off the debt, a collection agency may choose to take you to court. If this occurs, it is in your best interest to appear. If you lose, three things can happen:
- Garnished Wages
- Frozen Bank Accounts
- A Property Lien
Debts and Credit Reports
Once you start getting behind in your payments, you can be sure that the late payments will be negatively affecting your credit report. Credit card companies and lenders regularly report to the big three credit report companies. This lets any company that you apply to for credit, to see your late payments and charge offs. This information will stay on your credit report for several years. If you need to get more credit later, a low credit score means that you will not receive as good a deal – if you can get any credit at all. It will mean higher interest rates, smaller amounts of credit, and shorter terms for repayment.