What Would Actually Happen If You Ignored Your Bills?

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Like most Americans, you’ve likely gone through a rough patch where it was easier to dismiss your bills then actually deal with them. Unsurprisingly, this is a big no-no according to experts.

Neglecting bills results in severe financial repercussions, triggering a chain reaction affecting credit scores, accruing late fees, and potentially leading to legal action, said Sol Kruk, licensed home inspector and owner of Property Inspection Pros. “Recognizing that overlooking bills is an unsustainable solution is crucial, as it perpetuates a cycle of financial instability.”

Here’s a breakdown of what would actually happen if you ignored your bills, along with how to dig yourself out if you find yourself in this situation.

Late Fees and Penalties

When you don’t pay your bills on time, you’ll typically be charged late fees and penalties, experts warn. “These fees are designed to discourage late payments and compensate the creditor for the additional time and expense of collecting the debt,” said Linda Schroder, real estate investor and owner of Cash for Houses.

“Late fees can vary depending on the type of bill and the creditor, but they are typically a percentage of the outstanding balance,” she explained. For example, a credit card company might charge a late fee of $30 for a payment that is more than 15 days late. 

Over time, she says late fees can add up significantly and make it even harder to get back on track financially. For example, if you make a late payment of $50 on your credit card every month, you’ll end up paying an additional $600 in late fees over the course of a year.

Damage to Your Credit Score

“Your credit score is a number that lenders use to assess your creditworthiness,” said Schroder, noting that it’s based on your past payment history, credit utilization, length of credit history, types of credit and recent credit inquiries. “If you make late payments or don’t pay your bills at all, your credit score will suffer.” 

She adds that a low credit score can make it difficult to borrow money in the future, and you may also be charged higher interest rates. This can have a significant impact on your ability to buy a home, car or other major assets.

Collection Calls and Lawsuits

If you ignore your bills for long enough, experts warn that the debt may be turned over to a collection agency. “Collection agencies are businesses that purchase delinquent debts from creditors and attempt to collect them on behalf of the original creditor,” Schroder explained. “Collection agencies can be very aggressive, and they may call you repeatedly at all hours of the day.”

She says they may also send you threatening letters or even sue you. “A lawsuit can be a very stressful and expensive experience,” Schroder added. “If you’re sued for unpaid debt, the court may order you to pay the debt, as well as court costs and attorney’s fees.” In some cases, she says you may even have your wages garnished, which means that your employer will be required to withhold a portion of your paycheck and send it to the creditor. 

Loss of Essential Services

Another consequence of not paying your utility bills is that you may have your electricity, gas or water service turned off. “This can be a major inconvenience, and it can even be dangerous in cold or hot weather,” Schroder highlighted. “For example, if you live in a cold climate and your electricity is turned off during the winter, you could be at risk of hypothermia. Similarly, if you live in a hot climate and your water is turned off, you could become dehydrated.”

Increased Stress and Anxiety

Financial problems can be a major source of stress and anxiety. If you’re constantly worried about paying your bills, it can take a toll on your physical and mental health. 

Stress can lead to a number of physical problems, says Schroder, such as headaches, stomachaches and high blood pressure. It can also worsen existing health conditions, such as asthma and heart disease. Anxiety can also lead to a number of problems, such as difficulty sleeping, irritability and difficulty concentrating.

Even worse — chronic avoidance of financial responsibilities can induce a sense of helplessness, warned Clint Brasher, trial lawyer at Brasher Law Firm. “The persistent worry over accumulating debts and impending consequences can adversely impact mental health.” 

Actions To Take To Dig Yourself Out

Neglecting bills can snowball into a myriad of consequential problems, but here are a few ways to deal with them head-on.

Seek Expert Guidance

Molly Haines, real estate investor and owner of Cash Home Buyers noted that seeking expert advice to address these issues early on is crucial. “Ignoring bills can lead to mounting debts, damaged credit scores, and potential legal consequences like late fees or even legal actions by creditors.”

Haines emphasizes that seeking expert guidance, such as financial advisors or credit counselors, can help mitigate these repercussions. “These professionals can provide personalized strategies to manage outstanding bills, prioritize payments, and create structured repayment plans.” 

Moreover, she noted that they often negotiate with creditors on behalf of individuals to establish more manageable payment terms or potentially reduce outstanding debts. “Experts can assist in budgeting, offering tools and methods to effectively manage finances, allocate funds for bills, and avoid future financial distress,” Haines pointed out. “Seeking their guidance early on can prevent a minor financial issue from spiraling into a larger, more overwhelming problem, offering individuals a clearer path towards financial stability and peace of mind.”

Take a Proactive Approach

According to Ben Gold, founder of Recommended Home Buyers, taking a proactive approach to financial management is key to avoiding the detrimental effects of bill neglect. “By implementing practical strategies, individuals can safeguard their financial well-being and maintain a healthy credit profile.”

Gold recommends creating a comprehensive budget, setting up reminders for payment deadlines, and maintaining open communication with creditors. “These proactive measures can significantly mitigate the risks associated with neglecting bills, ensuring financial stability in the long run.”

Proactively addressing financial responsibilities is not just a matter of fiscal prudence, said Brasher, it’s a fundamental component of preserving emotional well-being. “By taking a proactive stance in managing bills and seeking support when needed, individuals can alleviate stress, fostering a healthier relationship with finances and promoting long-term peace of mind.”

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