When a person owes a debt and can’t pay it, they often feel there is little they can do. First creditors begin calling the debtor, asking the debtor to pay up. Next, creditors begin threatening the debtor that the creditors will hire a collection agency or take legal action against the debtor if the debtor doesn’t pay.
Ignoring Creditors is Not a Good Idea
Sometimes people think they can continue to ignore the creditors. This is not a good idea. You have alternatives.
Consider bankruptcy. Talk to someone knowledgeable about bankruptcy to find out if it can help you. Maybe bankruptcy isn’t right for you. Maybe it is.
Many people think bankruptcy will ruin their lives. They think they will never rebuild their credit. This is not true.
There are drawbacks to bankruptcy, such as your credit report reflecting your bankruptcy filing for a number of years.
There are, however, benefits as well. The main benefit is the fresh start you get and the ability to repay new debts and re-establish good credit over time.
No one wants to file bankruptcy, but the drawbacks to bankruptcy are far fewer and less devastating than the alternative – ignoring creditors.
The Consequences of Ignoring Creditors Completely
If you ignore a creditor completely, the creditor will go to court and get a judgment against you.
Next the creditor will get a court order for you to tell the creditor all about your finances and your assets.
If you ignore this order, the creditor will ask the court for a show cause hearing. A show cause hearing is a hearing where the court asks you to show cause, or give a good reason, for your failure to answer the financial questions of the creditor.
If you appear at the hearing:
- the court can fine you, jail you, or both, as a sanction for not responding to the creditor’s financial questions after the court ordered you to do so, or
- if you provide a good reason for your failure to respond, the court will simply give you another ten days to respond – you cannot get out of the requirement that you provide this information.
If you ignore the hearing and don’t appear, the creditor simply fills out a form, an affidavit, informing the court that there was a hearing scheduled, you were informed about the hearing, and you failed to appear for the hearing.
The court will then issue a warrant for your arrest.
Bankruptcy is a Solution to a Problem
As you can see, completely ignoring creditors is not a better alternative than bankruptcy.
Many people file for bankruptcy. This is an acceptable solution.
Be proactive and find out about your options, even if it is uncomfortable. The alternative is not a better solution.