Bills are something that we all dread paying, but at the same time, keep our lives running smoothly. We make monthly payments on our rent or mortgage, car loan, credit cards, and so forth. And while they may seem like a burden at times, not paying them can have an even more detrimental effect. If the expenses seem to mount more than the paychecks, you may want to consider either spending less, or using services like debt management companies. These debt management companies can help save you from one of the following consequences, which could all prove to be detrimental and jeopardize your chances of obtaining future credit.
Credit Score Drops
Each month of nonpayment causes your FICO score to take a hit. If your records make their way to debt collection services, this hurts you even more. As a result, you will not qualify to apply for credit, either cards or other loans. Depending on the company, some employers may also conduct a background check consisting of a look into your credit history. If that background check reveals unfavorable results, chances are you may not be hired.
Student Loans: Default
Student loan default is the result of not paying a bill for anywhere between 180 and 270 days. Default is a very severe consequence that can lead to wage garnishment. When that happens, the lender holds up to 15 percent of your paycheck, but can also take some or all of your income tax refund. And like everything else, your credit score continues to plummet, and you are referred to debt collection services. Neither of those are options you want to endure.
Home Mortgages: Foreclosure
Similar to a default, after months of mortgage nonpayment, the bank or lender seizes your home, a process known as foreclosure. While your wages are not normally garnished, you do lose your home, which is put up for auction and resold to another buyer, sometimes for a much lower price. If you face foreclosure, try to work out a deal with your lender, they may work with you, but you may also have to put up more money.
Car Note: Repossession
Like with a foreclosure, not making car payments for a number of months have the same effect. Here, your car is repossessed, and sold at an auction or another dealership. Again, working with the lender may get your car back, as long as you once again pay the back balance.
Credit Score Drops
Each month of nonpayment causes your FICO score to take a hit. If your records make their way to debt collection services, this hurts you even more. As a result, you will not qualify to apply for credit, either cards or other loans. Depending on the company, some employers may also conduct a background check consisting of a look into your credit history. If that background check reveals unfavorable results, chances are you may not be hired.
Student Loans: Default
Student loan default is the result of not paying a bill for anywhere between 180 and 270 days. Default is a very severe consequence that can lead to wage garnishment. When that happens, the lender holds up to 15 percent of your paycheck, but can also take some or all of your income tax refund. And like everything else, your credit score continues to plummet, and you are referred to debt collection services. Neither of those are options you want to endure.
Home Mortgages: Foreclosure
Similar to a default, after months of mortgage nonpayment, the bank or lender seizes your home, a process known as foreclosure. While your wages are not normally garnished, you do lose your home, which is put up for auction and resold to another buyer, sometimes for a much lower price. If you face foreclosure, try to work out a deal with your lender, they may work with you, but you may also have to put up more money.
Car Note: Repossession
Like with a foreclosure, not making car payments for a number of months have the same effect. Here, your car is repossessed, and sold at an auction or another dealership. Again, working with the lender may get your car back, as long as you once again pay the back balance.
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