Why Ignore Debt?

• Some people think if their debt is unsecured--meaning there is nothing used as collateral for the debt, like a house or car--their creditors can't go after them for payment. That assumption is wrong. While your creditors can't throw you into debtor's prison and throw away the key, they can go after the money you owe them. It may seem easier to ignore the bills that are steadily mounting, but the consequences you'll face won't be so easy. Your creditors will follow you, no matter what you do.
  
  

Creditor Harassment

• Once you are behind on your debts, creditors and debt collectors will start calling you and sending you letters, demanding payment of the money they are rightfully owed. Debt collectors make their money by calling consumers who are behind on their payments. They will call you at home and at work, trying to get you to promise to pay what you owe.
  
  In addition to the phone calls, you'll start getting demands for payment in the mail. If you are unlucky enough to have your debt assigned to a dishonest debt collector, he may not hesitate to contact family, friends and your employer about your overdue debts. While you are getting these phone calls and letters, your overdue balances are getting larger, thanks to interest and late fees.
  
  

Wage Garnishment

• Whether the economy is tight or not, your creditors expect their money. If you continue to ignore your obligations to repay your debts, they can legally sue you in civil court and the judge can order that you repay the money. In addition to being sued, the judge can order that your wages be attached and garnished for payment, meaning you won't take everything home that you earned. Instead, you'll be taking home a much smaller amount, while your creditors receive the rest of your paycheck as payment for your debts.
  
  

High Interest Rates

• New creditors and insurance companies make inquiries on your credit report. When they see overdue balances on your debts, if they extend credit at all, it will come at a higher price--in the form of higher interest rates. In addition, when you renew your insurance, your premium likely will be higher, if the insurance company decides to underwrite you at all.
  
  

Your Professional Life

• If you are looking for a new job or hoping to be promoted at your current job, a credit report full of unpaid bills sends the wrong message to new and current employers. Prospective new employers pull your credit report when they are looking at your resume and thinking of hiring you. A poor credit report as a result of ignoring debts gives off the impression that you can't manage money or be trusted with larger responsibilities.
  
  Likewise, if your current employer is thinking of promoting you, that pile of unpaid bills at home is reflected in your credit report. As with the prospective employer, a poor credit report may convince your employer that you aren't ready for increased responsibilities.
  
  

Alternatives

• Instead of ignoring debt, face your creditors. You may not have the full amount you owe, but you do have something. You can talk to your creditors and let them know that, while you can't pay everything, you want to negotiate. Creditors would rather get something than nothing, so your offer will be something they want to discuss with you. As you talk to them, don't let them pressure you into paying something that's beyond your financial ability. When you come to an agreement with a creditor, make sure you get every detail in writing before handing over any money.
  
  If you don't feel comfortable dealing with creditors directly, you can call a credit counseling agency and ask them for their help. However, before you call the first credit counseling agency listed in the phone book do your homework. Not all credit counseling agencies operate in the best interests of their clients. Once you have paid the debt, keep all correspondence and the "paid in full" invoices.