There are many people who are actively ignoring debt. Whether anxiety, lack of money, lack of effort or just the desire to not pay, there are consequences to ignoring debt.
Ignoring Debt and What It Means
One of the first instincts upon receiving a debt letter or a call from a collection agency is potentially to ignore the communication. This is never a good approach. The FDCPA protects consumers and allows them certain rights which will help in regards to negotiations and payment.
The Following May Occur if Debt is Ignored
- You could be sued for the debt if it is within the statute of limitations of your state.
- Debt collectors can continue to communicate with you unless you request communication cease.
- Damage to your credit report can come in multiple waves, such as a charge off, collection account and public record all for one account (if you continue ignoring debt)
You Can Be Sued for the Debt.
Just because a debt is small or with a large company doesn’t mean they will not sue. Sometimes, lawsuits are the best way to force collection. There are certain collection companies that will sue for any debt over $100 basically. This doesn’t happen with every debt, but it happens often enough. Another reason consumers are sued is if the debtor applies a cease and desist. If you do so, their only recourse will be to sue.
Damage Can Come in Waves When Ignoring Debt
Suppose you default on your credit card. The financer will over try to collect first. At this stage you likely have a few late payments on your credit report. If you ignore this, it will go to a charge off. If the account is charged off, the credit card company has written the debt off for tax purpose. They will often sell the debt to collection companies for pennies on the dollar. Now there are at least a 30, 60 to 120 day late payment AND a charge off. If the collection company decides to list the account, you now have a collection account. All of this is legal and falls under the FCRA guidelines. If the collection company decides to sue you, this will ALSO add a public record. Potentially SIX negative items from one credit card charge off. This is how it can snow ball.
Avoid Ignoring Debt and Take Action
It is time to stop ignoring your debt and take action. What steps should you take? That really depends on the amount of debt and what damage has already occurred. Using a credit repair checklist or guide will help you determine your next steps.
This article was last updated on May 19, 2022