Financial strain is ordinary. You may encounter emergencies that can cause a financial shortage. This may make it impossible for you to continue with regular bills. This may tempt you to stop paying some measures so that you can survive on the little cash you save from the remaining costs. Understanding the financial repercussions would go a long way in helping you to know the consequences you may be introducing in your life. Defaulting bills can become an inconvenience. Bills include loans, credit card balances, mortgages, utility bills such as electricity, water, subscriptions, cable, internet connections, etc. Stopping bill payment may attract the following consequences.
Utilities
These are domestic costs in the house. They include water bills, electricity bills, rent, cable, internet, etc. if these bills are not paid, the following can happen:
- Discontinuation of the utility service; in some instances, one can be able to apply for energy assistance in this scenario. However, if you owe the energy company, the application will be voided.
- Costly re-connections; when the service supply is cut off, the company may demand hefty charges towards its re-connection. Also, it may take longer for the service to be reconnected which may inconvenience you.
- Fees and interest to be charged on the amount; it may be expensive over-time since your balances may attract interest.
Mortgage
A mortgage is a home loan. It is a secured loan product that one takes against their house as collateral. Mortgages are usually long-term loans; therefore, you are supposed to pay monthly installments on the loan until when the full amount is paid together with the principal amount. If mortgages are not paid:
- Notice; notice of default shall be served to notify you that payment must be made before a certain data failure to which foreclosures process is initiated.
- Late payment fees; your month’s payment shall be rolled over to the next and a penalty added to it. So, you will be expected to pay a higher amount than the regular payment you used to repay.
- Contacting the guarantor; if your situation is too bad, the lender will turn to your co-signer to finish the balance on your behalf. If the guarantor is in a bad shape, then the debt will as well affect their credit rating.
- Foreclosure; the lender may take action against you by instructing the courts to order the auction of your home. The lender auctions your home to recover the money they lend you. Auctioning may not be enough to clear all the balances with the lender since it may have earned interest. So, apart from losing your home, you will have to pay more money to the lender. You are advised to get a good price on your house before the court declares the lender’s wishes.
Other Creditors
These are credit balances from your business, goods bought on hire purchase, online loans, etc.
- Independent collection; most of the online loan defaulters or other cases like business creditors will sell your account to the independent collectors to follow up on your debt. Collection agencies can be very aggressive; they can leave you more than ten calls and messages as reminders to pay. However, they are bound by the law not to call or text during odd hours, also, they are forbidden from using foul or abusive language. Also, it is against the law for them to reveal or discuss your financial situation with a third party.
- Frequent reminders; you will receive communication in the form of letters at first reminding you to pay up. It becomes calls and text messages very fast. These calls will be demanding for payment and promptly.
- Generally, if you signed a contract of payment with a creditor, then they may threaten to sue you for breach. The following are actions that may be taken in case a contract is involved.
- Acceleration – this situation the court may rule for you to pay up the debt in full and at once. Also, they can argue to have your properties or estate be seized and auctioned to raise money to repay the debt.
- Repossession – in this case, if you had purchased a product on credit then the good may be taken away by the creditor. Also, the creditor may claim the security of the loan you placed. If the value of the loan is more than what the collateral is worthy, then you will have to pay up the remaining balance.
- Garnishment – the creditor may sue you. After the proceeding and you are found guilty of breach of contract, then the court can order your accounts be withheld so that part of your earnings can be transferred into loan repayment. Also, they can garnish your salary to pay the creditor.
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Government Debts
These debts include property taxes, child support, etc. government debts such as student loans are usually cheaper. They have lower rates since they are subsidized. To get these loans you just need to give a good reason to be why you are applying, you can also apply for a delay; giving sufficient explanation. The government can forgive other debts even to the public servants.
Bankruptcy
Continued inability to pay debts may lead to you asking the court to declare bankruptcy on you. You will get relief from loan repayment, but the messages will still be sent. Also, the bankrupt report on your profile is a bad sign; it remains on your credit history for more than a year. Which means it will damage your account considerably. If you need cash urgently check nice deals at https://www.gmcreditz.com.sg.
The Bottom Line
Creditors and lenders will be seeking to raise their money back. Therefore, they will use any means necessary in the law to regain their assets. Defaulting on loan or bills payment affects the businesses of the lenders. If the risk grows bigger, they will move to mitigate it rather than suffering the loss. The methods they will use are what entail the consequences of the borrower or the debtor.