Consequences for not paying debts

Some Florida residents who are struggling with their financial obligations might wonder what will happen if they do not pay their bills. The consequences depend upon the type of debt. For example, a private student loan lender may sue the debtor. With federal student loans, there is a grace period of 270 days for a missed payment. After this point, the government may garnish a person’s wages or other payments, such as Social Security, or may turn the debt over to third-party collectors. The government may also sue in some circumstances.

Medical debt may be aggressively pursued by collection agencies, but there may be ways to prevent this. It is estimated that there are billing errors on around half to 80 percent of medical bills. Even if there are no errors, it might be possible to work out a payment plan with the provider.

There may be a grace period of 15 days for missing a mortgage payment. Missing a second payment can cause the mortgage to go into default and missing a third one means the mortgage is delinquent. The next missed payment usually triggers foreclosure proceedings. However, there are unlikely to be legal consequences. If car payments are missed, the consequences depend on the terms of the contract. A car may be physically repossessed or remotely disabled.

One advantage of filing for bankruptcy is that it stops creditor harassment and will also put at least a temporary stop to any of these actions. Furthermore, with a Chapter 13 bankruptcy, people may be able to save their home or other assets by working out a payment plan with the creditor. Therefore, while a bankruptcy damages a person’s credit, it may lead to a better financial outcome than continuing to fall behind on bills and having assets seized by lenders.