It is scary to come to a point where you can’t pay your monthly bills. Maybe you’ve just missed one credit card payment, or maybe you’ve fallen behind on a number of bills for a number of months.
The truth is that everybody wants to pay back their debts. We understand that if you’re not making your monthly payments it is because you can’t afford to. What happens when you stop paying your bills depends on what type of debt it is.
Not Paying On Credit Card Debt
Within a few days of missing a credit card payment, the creditor will begin to call you and send you letters in the mail. If debt collection calls become distressing, you have the power to stop the calls.
Depending on the terms of your agreement with the creditor, interest and penalties may be added to the amount you owe. The amount of money you owe is likely to continue to increase, even if you are no longer using the credit card.
Your creditor can file a lawsuit against you for nonpayment of debt. If your creditor is successful in court, they get a judgment against you. With a judgment, your creditor then has the power to garnish your wages or levy (take money from) your bank account.
This applies also to medical debt, personal loans, and other unsecured debt. However, the IRS does not have to sue you or go through the court process to be legally able to garnish wages or levy bank accounts.
Not Paying Your Car Payment
Car loans are secured debts. The loan is backed by the car. So, if you fall behind on your car payments, the lender has the right to repossess the car.
If this happens, the lender will then sell the car at auction and use the proceeds to pay off your loan. If the car sells for less than what you owe, then the lender can bring the collection action against you for the deficiency.
Before repossession, most lenders will contact you in an effort to get you caught up on your payments. However, since the value of automobiles depreciates quickly, typically a lender will repossess a car after only a few missed payments.
Not Paying Your Mortgage
Most home loans come with a 10-15 day grace period. If you do not make payment within the grace period, a late fee will be assessed. At this point, the lender will likely begin to call you and send you letters reminding you that your payment is due.
Mortgages are secured debts backed by the house. If you fall behind on your mortgage payments, the lender has the right to foreclose on your house.
If you miss one payment or a few, we encourage you to discuss loss mitigation options with your lender. You may be able to work out a payment plan, loan modification, or be edible for short-term forbearance. Alternatively, you can Catch Up on Missed Mortgage Payments with Chapter 13 Bankruptcy.
If you’re unable to pay your bills, bankruptcy may be the solution to your debt problems.
Filing for bankruptcy can erase your credit card debts, other unsecured debts, and judgments creditors have against you. Bankruptcy stops wage garnishments, bank levies, and any lawsuits your creditors have filed against you.
Bankruptcy, at least in the short term, stops repossessions and foreclosures. To learn how; read our articles The Power of the Automatic Stay and How It Helps You and Bankruptcy Stops Collection Action.
If you’re unable to make your monthly payments on credit cards or to other creditors, contact us right now to schedule a free consultation to discuss how bankruptcy can erase your debts.
We’re located centrally in the Savannah, GA area. We serve Savannah, GA, and the surrounding areas including Chatham County, Effingham County, Bulloch County, Bryan County, Liberty County, Long County.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.