What Happens If You Ignore A Legal Debt?

When facing financial difficulties, it can be tempting to ignore a legal debt, hoping the problem will go away. However, ignoring a legal debt can lead to serious consequences, both financially and legally. Seeking advice from legal and financial services can help you manage your debt and avoid severe repercussions. Here’s a look at the repercussions of ignoring a legal debt.

Accumulation of interest and fees:

When you ignore a legal debt, the amount you owe does not simply remain static. Most debts accrue interest over time, which means the longer you wait to address the debt, the more you will owe. Additionally, many creditors impose late fees or collection fees, which can further increase the total amount due. This accumulation can lead to a substantial financial burden, making it increasingly difficult to pay off the debt later.

Credit score impact:

Ignoring a legal debt can have a significant negative impact on your credit score. Creditors typically report unpaid debts to credit bureaus, which can lead to a lower credit score. A poor credit score can hinder your ability to obtain new credit, secure loans, or even rent an apartment. It may also result in higher interest rates for any credit you are able to secure in the future.

Collection actions:

If you continue to ignore the debt, the creditor may take further action to recover the amount owed. This can involve hiring a collection agency, which will actively pursue you for payment. Collection agencies can be persistent and may use various tactics to collect the debt, including phone calls, letters, and even visits to your home or workplace.

Legal action:

Ignoring a legal debt can eventually lead to a lawsuit. Creditors have the right to take legal action against you to recover the money owed. If they file a lawsuit and win, they can obtain a judgment against you, allowing them to pursue wage garnishment or bank account levies. This means that a portion of your income or funds in your bank account could be automatically deducted to pay off the debt.

Asset seizure:

In some cases, if a creditor successfully obtains a judgment against you, they may have the right to seize your assets. This could include valuable property or possessions, depending on the laws in your jurisdiction. The thought of losing your assets can be distressing and further focuses on the importance of addressing legal debts quickly.