Many people don’t care about paying off their debt or usually make late payments. But do you know the consequences when you don’t pay your credit card debt? Not only you will receive an extra interest rate for late payments but also your credit card can be frozen if you continue to miss payments. So before getting any loan make sure to plan your budget or make some savings to repay the loan. Also, try to borrow the amount that you can easily payback. Because if you fail to make the payment your credit card can cause great troubles. You can be sued or your debt could be sold to a collection agency that will pursue the unpaid debt.
So if you are not familiar with several consequences of not paying debt, you can read them in these. We write a complete breakdown of all the consequences. Let’s take a look:
Negative Effect On Credit Report Or Credit Score:
Everything goes downhill from the day you stop paying debt including your credit score. When you make late payments or stop paying debt, lending reports your account to the credit bureau. As a result, your credit score starts decreasing. And a low credit score can ruin your chance to get a loan in the future. Plus, your insurance rate could also increase as a result of your credit failure.
As long as you have unpaid debt, it will leave a serious blemish on your credit report making it challenging to find a new lender for borrowing further money in the future. Moreover, if you pay the debt it will not stay there for the next seven years, notify everyone that once you default your payments. So if you don’t want to be disqualified for future loans and want to maintain a good credit history don’t ever default any payment.
Late Fees And High-Interest Rate:
When you make late payments or stop paying your debt late fees start to add to your account. Consequently, increase your monthly payments. But the most damaging thing of defaulting payments is the high interest rate. When you stop making payments for 60 days which include two payments, your interest rate rises to the higher penalty rate. As a result, your monthly payments will become larger as more late fees and penalty interest rates are added.
Moreover, it also lowers your chance to get further loans, or if you get approved for a new loan you will probably receive a high-interest rate because of your previous non-payments. Also, you may need to provide a security deposit which will be returned after the completion of the loan.
Default payment can also come in the way of your employment, as many recruiters check credit history before hiring. In such a case, your accumulated debt can disqualify you to get recruited and possibly make it difficult to get future loans with unemployment.
Constant Calls And Lawsuit:
Yes! Unpaid debt can result in constant calls and letters from debt collectors until you make repay your loan. You can ask them to stop but most lenders ignore them. And even worse is a lawsuit, your debt collector can sue you for unpaying debt, negatively affecting your image and business. So if you don’t want to get sued make sure to make timely payments and maintain a good relationship with lenders for future dealing.