Being in debt is overwhelming. It could be from credit cards, personal loans, medical bills, or unpaid utilities- but when the bills pile up, it’s easy to feel stuck and not know where to turn. Sometimes, ignoring it feels easier than facing the issue head-on, but avoiding your debt doesn’t make it go away.
If you’re in debt and hoping it will magically disappear, this blog is for you. Below, we’ll walk you through what can actually happen when debt is ignored, and what you can do to take back control.
The Price of Avoiding Debt
Before we get into the technical side, it’s worth talking about the emotional weight of being in debt. Many people feel shame, guilt, or anxiety about their financial situation. The emotional burden can make it feel easier to just look the other way. But the truth is, ignoring your debt increases your stress; bills pile up, collection calls start, and it gets harder and harder to ignore.
What Happens When You Ignore Debt?
Here’s a breakdown of what typically happens when someone in debt avoids dealing with it:
- Interest & Fees start to Build: Most debt comes with interest, and the interest continues to accrue even if you’re not making payments. On top of that, late fees are often added, increasing the total debt to something that’s much more unmanageable to pay off.
- Your Credit Score is Affected: Payment history is one of the biggest factors that affect your credit score. Even one missed payment can hurt it, and continued missed payments can cause serious damage. A lower credit score affects the ability for you to do things like rent an apartment, get a loan, or even land certain jobs.
- Collection Agencies Get Involved: After a few months of missed payments, your debt will likely be turned over to a collection agency. These agencies will begin contacting you to recover the debt, usually over the phone or by mail.
- Legal Action Might be Taken: If attempts to collect your debt are consistently unsuccessful, you could be taken to court. If a creditor wins the case, they might be able to garnish, place a lien on your property, or levy your bank account. While not all debt results in legal action, it’s always a risk.
- Your Options Begin to Dwindle: The longer you ignore your debt, the fewer options you have. Creditors may be less willing to work with you on payment plans or settlements if you’ve been unresponsive for a long time. Acting early gives you more control over the way the process will go.
The Timeline of Ignoring Debt
Although the specific timelines depend on the original creditor, here’s a general look at how things progress if you’re in debt and don’t make any payments:
- 30 Days Late: You might be charged a late fee, and your credit score may drop slightly.
- 60 Days Late: More late fees may be added, and the missed payment could lead to internal collections efforts. While not all creditors have the ability to report to credit bureaus, the continued nonpayment may still impact your standing with lenders or service providers.
- 90+ Days Late: At this stage, your account could be escalated to legal action. Some creditors may choose to pursue a lawsuit to recover the unpaid balance, which can result in a court judgment and additional consequences.
- More than 6 Months: Creditors might write off the debt and sell it to a collections agency- legal action may follow.
Common Myths About Ignoring Debt
Let’s clear up a few things many people in debt believe:
- “If I ignore it, it will go away.” As we’ve covered before, it won’t just disappear- it often grows bigger.
- “They can’t find me if I move.” Debt collectors have tools to locate people, even if you change addresses.
- “The debt is old, so it doesn’t matter.” Even though debt may fall off your credit report after 7 years, that doesn’t mean it disappears completely. In Oregon, for example, the statute of limitations on debt can be up to 6 years, meaning you may still be legally liable and subject to collection or legal action within that time- depending on the type of debt.
What You Can Do Instead
If you’re in debt, the best thing you can do is take action, even if it’s just a small first step.
1. Make a List
Start by listing all your debts: who you owe, how much you owe, and how behind you are; this task gives you a clear picture of where you stand.
2. Reach Out to Creditors
Many creditors will work with you, especially if you reach out before your debt goes to collections. Ask about payment plans, interest reductions, or hardship programs.
3. Talk to a Credit Counselor
Nonprofit credit counseling agencies can help you come up with a plan and even negotiate with creditors on your behalf. They’re usually free or low-cost and can be a great resource.
4. Consider Consolidation or Settlement
Debt consolidation rolls multiple sources of your debts into one monthly payment, often with lower interest. Debt settlement involves you negotiating with creditors to come up with a plan to pay less than you owe. Both options have pros and cons, but they might be worth exploring.
5. Know Your Rights
If debt collectors contact you, remember that you have rights under the Fair Debt Collection Practices Act (FDCPA). They aren’t able to harass or threaten you, and you can request communication in writing.
Final Thoughts: Facing Debt Is Better Than Avoiding It
Being in debt is hard, but avoiding it makes things worse. By taking small, manageable steps today, you can start to regain control of your financial situation. Remember, you don’t have to fix everything overnight- but doing something is always better than doing nothing.
If you’re in debt and not sure where to turn, consider reaching out to a financial advisor, credit counselor, or local resources for support. The sooner you act, the more options you’ll have.
If ignored debt is starting to affect your business, Creditors Specialty Northwest can help you take the right steps toward recovery. We provide professional, respectful debt recovery solutions that help you get paid- without damaging relationships.