What happens if you just ignore your debts?

FlorayG

Lots of posts here from people who want to get to grips with their problem and well done to them for making a start. I'm not in debt, I'm lucky, but I do wonder what happens eventually to the people who DON'T ask for help, just keep struggling on, making minimum payments, missing payments etc,? If they have an interest only mortgage or even live in rented or with family? At what point do 'the authorities' interfere and what happens?  We of course never hear from those people on this forum but I am curious  (because yes, I do know someone who is doing JUST THAT)

Mark_d

Making minimum payments, missing payments may give temporary relief but really add to the cost in the long run.  You pay more interest, late payment fees, and you get higher interest rates on loans etc. because of poor credit record.  You also wouldn't get good reward/cashback credit cards.  It would be a downward spiral.

To get an interest-only mortgage you would need to be a very responsible person with significant deposit and good salary.  Living in rented you'd end up getting evicted for non-payment of rent.  Family wouldn't give up on you but you would be denting their credit records.

When you end up on the streets then the authorities might put a roof over your head if you're lucky.

sourcrates

Well the title of your post asks what happens if you ignore your debts, yet your thread changes tack to what becomes of those who carry on regardless, they are two separate scenarios to be fair.

You could ignore your unsecured borrowing completely and nothing would happen, yes you`d get the normal collection activity, but not everyone is chased for their bad debts, debt collectors usually concentrate on those who make contact with them, if you ignore them completely, they will make a commercial decision, based on what they know about you, as to whether to take legal action or just walk away.

The debt collection process differs lender to lender, but there are so many defaulted debts that they must prioritise who they go after, and who might just get the odd letter, even once legal action is taken, it doesn't mean they will get any money, if you don`t work, have a benefit only income, and rent or live with parents, there is virtually nothing a lender can do to get their money back.

If you know how the system works, and have no money or assets, the debt is easy to avoid.

They can deduct money at source, but only at a certain level, and it would take far too long to repay in most cases at the limited rate the DWP can make deductions from your benefits, so they rarely bother as its just to much hassle for very little gain.

Brie

Define "the authorities".  If you mean some government department well they won't bother as long as it's not money owed to them in some form - council tax, benefit overpayments etc.  

If you mean a bank or other creditor it does really depend on their processes, the person who might look at your file, what the computer might generate as an activity that needs to be done, your potential for payment eventually.  Some companies pass debts along to official channels who will eventually send bailiffs around but even those can be evaded.   

MEM62

FlorayG said:

I do wonder what happens eventually to the people who DON'T ask for help, just keep struggling on, making minimum payments, missing payments etc,? 

The hole (debt) just gets bigger until they have their lightbulb moment and stop digging.  Pity of it is, if many had had it earlier the amount of debt that they are dealing with would be smaller.