Most people are struggling under debts. Do you know consequences of not paying credit debt? Before applying for a loan or credit, it is essential to plan your budget and apply for an amount that you will be able to afford. Otherwise, when you fail to repay, your credit debt leads you to face with several consequences. You can be sued or your debt can be sent to a collection agency which pursues unpaid debts of firms. Let’s find details of consequences of not paying credit debt in below:
Credit Report Impacts And Marks
As your accounts get reported to the credit bureaus, your credit score gets damaged and a low credit score would not help if you need to apply for another loan to repay the previous one or for your additional expenses. As long as you have unpaid debt collections and are considered as a risky customer, it would be extremely difficult to find a new lender who is willing to give you a loan. Moreover, even if you pay the collection, your credit report will not be cleaned until the credit reporting time limit ends.
High Interest Rates And Unemployment
Even if you have a chance to be approved for a new loan, the interest rates you will get will probably be extremely high and hard to afford due to the risk of nonpayment. Also, you may be required to pay a security deposit which will be returned if you make your repayments regularly. So, you need to pay your credit debt before applying for a new loan if you want to get affordable and reasonable interest rates.
Moreover, since some employers check your credit report before hiring, your accumulated credit debt may cause you to fail to find a job and it would be almost impossible to find lender who is willing to lend you a loan because of your unemployment and insufficient income.
Constant Calls And Lawsuits
You will probably have phone calls and letters constantly from creditors or debt collectors until you repay your credit debt. You can write or ask them to stop their calls but most collectors ignore the rules. Also, what is even worse is a lawsuit. Regardless of the amount of your debt, creditors have a right to sue your for your debts when you unable to pay.