The Consequences of Ignoring a Debt Collection Agency
If you're ignoring a debt collection agency, hoping the debt will go away on its own, you may be in for a surprise. Ignoring a debt collection agency will not make the debt disappear, and may result in additional consequences and costs. It's important to address unpaid debts as soon as possible to avoid negative consequences.
Here are some potential actions that a collection agency may take if you ignore their attempts to collect the debt:
Credit reporting: One action a collection agency may take if a debtor fails to pay is credit reporting. A collection company may report unpaid debt to one or more credit bureaus, which could negatively impact the debtor's credit score and creditworthiness. A lower credit score can make it more challenging to borrow money or secure loans in the future and may even affect one's ability to rent an apartment or get a job.
Legal action: Often, a collection agency will file a lawsuit against a debtor to obtain a judgment. If the court rules in favor of the agency, the debtor may be ordered to pay the debt plus additional fees and interest.
Small claim: A collection agency may sue in small claims court to recover a smaller debt (which varies by state). When a collection agency files a small claim, it hopes to obtain a judgment, allowing the agency to garnish wages or seize funds from a bank account to satisfy the debt.
Garnishment: When a collection agency obtains a judgment against a debtor, the agency may be able to garnish the debtor's wages or seize funds from their bank account to satisfy the debt. Garnishment is a legal process allowing a debt collector to take a portion of a debtor's income or assets to pay off a debt. The amount of income or assets that can be garnished depends on the laws of each state and the type of debt.
Property liens: A debt collection agency may file a lien on one's property. As a result, the agency has a legal claim to the property and might be able to sell it to recover the debt. Liens can be placed on real estate, such as a home or other property, or personal property, such as a car or other valuable assets.
Passport revocation: Delinquent tax debt may lead to an individual's passport being revoked or denied.
License suspension: If a debtor holds a professional license, such as a medical or legal license, they may risk losing their license if they have unpaid debt that is reported to the relevant licensing board.
Avoiding a collection agency will not result in the debt going away; instead, it may result in additional costs and consequences. If you cannot pay the debt fully, don't hesitate to ask for a payment arrangement. Remember, debt collectors have feelings too, and most reputable debt collection agencies, like Fair Capital, will try to work out a solution with you.