Debt is one of the big issues many borrowers are facing today.
After borrowing a loan, a person tends to forget about the responsibility, thus leading to defaults and huge penalties.
Also, some borrowers think that you need to shell out money if you want to get out of debt.
That can only be true if you’ve used the services of third-party organizations. But on your own, you don’t have to pay anything.
Naturally, if you don’t pay the lender, the ‘collection hounds’ will be sent after you. If you’ve ever been delinquent on a debt, you probably know that creditors get a little antsy when you stop paying them.
You’ll likely get phone calls and letters reminding you that you’re past due and asking for a payment.
Eventually, unpaid debts are charged off – meaning the creditor writes them off as a loss.
That doesn’t mean the debt disappears, however, or that you no longer owe the money.
Once the lender has approached a debt collection agency, prepare for a wave of phone calls and half-threatening letters.
If the collector cannot get you to pay, your case will be turned to another collector until you yield. Or until a subpoena is served!
What About Lawsuits?
Persistent debt collection can go for many years.
Even once the negative marks start falling off your credit report few years later, the creditor of record still has a right to attempt to collect their money. And you may choose to continue ignoring them.
In this scenario, your credit takes a pretty vicious beating and you’ve collected a tidy stack of angry letters, but you haven’t actually paid anything. How long can that go on?
Typically, it depends on the size of your debt and the disposition of your creditor.
Credit is usually extended under an agreement that spells out who’s required to do what.
Once you stop repaying your debts, you’ve very likely broken that agreement and the creditor in question has every right to take you to court in pursuit of that money.
In most cases, should a creditor take you to court and win the case, your wages will be garnished, with a percentage taken out automatically and directed towards your debt.
Don’t rest your laurels if the creditor won’t actually sue you.
It may not happen today, but they may find the grounds to do so, someday.
Always communicate with the moneylender so both of you can discuss repayment options. Losing the trust of a lender will lead to negative things someday.