Falling behind on one’s bills is not unusual. We all find ourselves in that place at some point. But falling behind is not a good reason to ignore collection efforts. And in fact, ignoring such efforts is simply not wise. If you want to know the #1 reason why, keep reading.
For the purposes of this post, I will assume you are dealing with debts that have not yet gone to collection. Maybe your utility company is after you because you haven’t paid your electric bill for several months. Perhaps you owe your internet service provider or have outstanding credit card debt you are having trouble paying.
The common thread in all of these situations is that the companies you owe are reaching out to you in an effort to work out some sort of payment. Do not ignore them. Respond to their inquiries. Calmly and truthfully explain your circumstances and do your best to work out a compromise.
What Could Happen if You Ignore Them
What could happen if you ignore creditors? It’s possible that they could eventually throw up their hands and walk away. They could also send your unpaid debts to collection. But the third option is the worst one for you, and the #1 reason you should not ignore your creditors: they could sue you.
Civil lawsuits in debt collection cases have gained popularity in recent years due to restrictive consumer protection laws that limit how far creditors can go to collect unpaid debts. Civil lawsuits take unpaid debts to a new level by establishing a legal recognition of said debts and giving creditors access to stronger collection tools.
An Example Scenario
Let’s take a look at an example scenario involving you and a credit card company. You have $10K and outstanding credit card debt and the company decides to sue. They are going to ask the court to reward them the outstanding balance plus interest and penalties. They are also going to ask that you be forced to pay their legal expenses.
Should they win, you could be on the hook for $20K-$30K. But that is only the half of it. Your credit card company is unlikely to send the judgment to standard collection. Instead, they will bring in a judgment collection agency like Salt Lake City’s Judgment Collectors.
The collection agency will have access to a variety of collection tools. They include:
- Wage and bank account garnishment
- Judgment liens placed against your property
- Property seizure and sale of nonexempt assets
In other words, the stronger collection tools afforded by a civil judgment essentially allow the credit card company and its collection agency to force you to pay. Unless you are legitimately judgment-proof, they will extract payment from you one way or another.
It’s Better to Work Out a Compromise
Being sued is bad enough. Losing a debt collection lawsuit is even worse because creditors generally have 7-10 years to collect. Most states allow them to renew judgments for an additional 7-10 years if they fail to collect during the first round. You could find yourself forever looking over your shoulder until you pay what you owe. That is no way to live.
In my opinion, it’s far better to work out a compromise with creditors as quickly as possible. Enter into some sort of monthly payment agreement. Offer a one-time lump sum payment in exchange for the creditor accepting a lesser amount. There are plenty of options. The point is to find one. Should you choose to ignore creditors instead, you could be setting yourself up for a 7–10-year nightmare.
