How Unpaid Debts Can Affect Your Financial Future

​Unpaid debts can affect your life for several years.  You may be stressed over how to pay your bills and think it would be easier to not pay them, but not repaying what you owe can cause long and short term problems you may not have considered.

 Short Term Effects

• You may have additional fees, such as late or collection fees, added to your debt which will make it even harder for you to pay the debt.
• Your credit score will drop.
• You will more than likely need a larger down payment for purchases or deposits.
• You will have a harder time refinancing any loans you may have or to get loans to make new purchases.

Long Term Effects

• Higher interest rates on new loans.
• Interest may be continually added to the debt.
• You may not be able to get loans in the future.
• You may find it difficult to raise your credit score as negative items often outweigh the positive items.

Depending on what kind of bills you haven’t paid, you may also have other financial problems. 

• If you haven’t paid your utility bills, such as electric or gas, it may be harder to get new service if you move and you may be required to put a deposit down on your service.
• Auto loans that are not paid can result in your car being repossessed.  Without transportation, losing your job is a real possibility which will cause even more problems.  Even if you voluntarily choose to give the car back, you will still have repercussions on your credit score.
• If you don’t pay your phone bill, it can be difficult to find another phone service provider that will be willing to offer you a service plan.
• Not paying your mortgage can result in the bank foreclosing on your home and it may also make it nearly impossible to get another mortgage loan in the future. 
• You may be evicted if you don’t pay your rent.  Many agencies check your credit score before offering you a lease so being evicted once will make it difficult to find another place to live.

A low credit score can also raise insurance rates.  You may also be denied new credit cards for many years.  Besides the financial effects that unpaid bills have, the stress can cause health problems and depression.  Many companies would rather get some of their money than none so contact your creditors as soon as you are having problems to see if you can work out a payment plan you can both agree on.
 

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