What Will Creditors Do?
If you’ve fallen behind in your payments, some companies that make
their money off of “helping” will make it sound as if creditors
are going to be taking you to court, securing a judgment against you and garnishing
your wages and seizing your property very soon. If you don’t sign up
for their services, these companies say, you can expect sheriffs to come knocking
on your door any moment. (Collection agencies also play this tune.)
It is likely that your car will be repossessed if you miss payments on it.
And it’s likely that the bank that holds your mortgage will foreclose
if you miss several payments on your home. Those are secured debts; the property
serves as collateral.
But when it comes to unsecured debt, especially credit cards, it is unlikely
that a creditor will take you to court to collect a few thousand dollars.
We’re not saying it never happens. But the odds of it happening to
you are relatively slim, simply because there are so many consumers who
have debt repayment problems. Taking every one of them to court would be
exorbitantly expensive for lenders.
Therefore, what creditors normally will do is report your bad behavior to
credit bureaus, which affects your credit rating. And, eventually, they turn
your account over to a collection agency.
Next: Collection Agencies
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