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What Happens to Your Unpaid Debt?

Did you know that some forms of debt don’t follow you around forever? If the statute of limitations has expired, the debt collector can no longer sue you to recoup the debt. But when does this happen? What happens to it when it does expire? And most importantly, will all debts expire? Safe Credit Solutions has the team of debt relief and credit repairs experts able to answer all of these questions and more.

What happens to unpaid debt?

Finding yourself unable to pay off a lot of debt can be one of the scarier situations in life. One reason it is so overwhelming is because it’s easy to feel like you’ll be stuck in debt forever. This debt will follow you around for the rest of your life. Your credit will be in shambles and you’ll never be able to get approved for new loans. Not so fast! Realistically, here’s what you can expect if you don’t pay your debts:

  • Your debt will go to a collection agency.
  • Debt collectors will contact you.
  • Your credit score will fall.
  • Your debt will follow you around for years.
  • You’ll pay off the debt or not, but either way your life will go on.

It’s important to keep in mind that there is a big difference between a $50 unpaid phone bill debt and a $50,000 credit card bill debt. It may be that an unpaid debt of $50 doesn’t cause you much grief. Other than your credit score going down for a while, maybe nothing happens other than a few dozen phone calls. That’s not likely to occur with a $50,000 debt, though. If you are late with a debt payment of this size, at some point you could be sued by the person to whom you owe the money. You will receive notice of a court date. If you don’t show up, you automatically lose the case. At this point, your wages will be garnished at 25% out of every paycheck. A lien can also be put on your home or car. There is a statute of limitations on credit card debt. It varies by state, but it’s generally three to 10 years.

Your credit score takes a huge hit too. How long a collection stays on your credit report depends on the type of loan you have. Most of them stick around for seven years. Chapter 7 bankruptcies will show up for 10 years. Unpaid student loans and taxes may stay forever! 

It’s a little trickier than simply waiting for it to fall off your credit report. Your debt isn’t simply erased once it falls off your credit reports. If you never paid off the debt and the creditor is within the statute of limitations, they may try to collect the money. The creditor can still contact you, sue you, or get a court order to garnish your wages.

This is why it’s best to work with our team to lower your debts and repair your credit, not simply hope, pray, and wait for it to go away. Ignoring debt only makes it worse, not better.

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