It is understandable to be unsure of what to do when you become so overwhelmed with the amount of debt you owe, but not paying your bills is not the answer. Below is a very real hypothetical situation that could occur if you let your bills pile up by not paying them.

1.  Your creditors will tack late fees onto your account per month, typically totaling $39 per month.
2. You will still be assessed finance charges by your creditors.
3. Your annual percentage rate, or APR, will most likely increase to the default percentage rate of nearly 30% because you have neglected your end of the contract.
4. As soon as your balance is more than your limit, over-the-limit fees of approximately $30 per month will also be added to your growing balance.

These may sound like small numbers, but these are per month charges that will be added to your credit card balance if you decide to forego paying your bills.  These fees can and will add up fast.

Not only will you have increasing bill payments, you will also receive calls from creditors regarding your unpaid bills.  If you do not answer the calls, your unpaid account will most likely be turned over to a collection agency so that they may attempt to collect on your debt.  After the collection agency attempts to collect on your debt with no avail, the account can be charged off.  A charge off is not a good thing nor is it the end of your financial woes.  A charge off, collection, and late payment all report as negatives on your credit file.  As you know, the more negative items that appear on your credit report, the lower your credit score.  The lower your credit score, the more difficult it will be to get a credit card, secure a mortgage or other loan, obtain a job or insurance, or even rent an apartment.  Keep in mind – bad debt will stay with you.

It is not advised that you default on your bills or ignore paying them all together.  Instead, take the following recommended steps:

1.  Stop charging to your credit cards so your debt does not get larger.
2. Plan a budget or debt reduction plan and stick to it. 
3.  Contact a professional if you are unable to handle your debt on your own, You can call our office at 1-888-456-5635.

Robert Weinberg is one of the nation’s leading experts on debt elimination and credit management.   Robert can be reached at 888-456-5635 or by email at RW@YourDebtResource.com. Be sure to check out Robert’s blog at YourDebtResource.com. Don’t forget to sign up for our weekly Debt & Credit Strategies newsletter. Looking for help with your current debt situation? You are encouraged to take part in our Free Debt Analysis.