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Have more debt than you can handle? Maybe you’re balancing a combination of a mortgage, auto loan, student loan or credit card debt and no matter how much you budget, there’s not enough funds to go around.

You’re not alone. The average American family holds an average of $8,377 in credit card debt alone. Combine other long-term debt and costly monthly expenditures and even decent incomes can be stretched way too thin.

So what would happen if you were to stop paying some of your debts? Is your life over? Do you go to jail? Does your credit score merely take a hit? Let’s dig deeper into various scenarios, potential consequences and what the options are for how to get out of debt.

Consequences to Not Paying Debt

The consequences of unpaid debt differ depending on the type of debt it is that you’re not paying. Let’s look at a few different scenarios:

MortgageIf you stop paying your mortgage, your house will eventually be foreclosed on and you’ll be left homeless.

Auto Loan – If you don’t pay your auto loan, your car will be repossessed leaving you stranded.

Federal Student LoanA variety of things could happen if you don’t pay your federal student loan, such as wage garnishment, withholding of your federal tax refund or additional collection costs added to your debt total.

Private Student Loan – Private loans vary depending on the terms of the loan. A missed payment might be allowed in the loan contract, but if you stop paying the loan entirely, your lender could sue you, and if successful, garnish your wages.

Credit Card Debt – The longer you forego credit card payments, the worse the consequences become. According to CNBC, after you’re 30 days late on a payment, a creditor might contact you. You shouldn’t ignore this communication; it’ll only worsen things. Remember, creditors, as robotic and unsympathetic as they may seem, are humans and are more likely to be understanding of your situation.

After 60 days, your interest rates will probably increase to the penalty stated in your contract and you’ll be charged a late fee. After three months of not paying your debt, your account will be shut down and your debt sold to a collection agency. Depending on your state, you can be sued or a lien could be placed on your bank account.

Not paying any kind of debt will obviously severely damage your credit score and follow you for years. It could also hurt your ability to get certain jobs. Whereas paying off credit card debt can be one of the best decisions of your life. I should know.

Any co-borrower on your loan will also land in hot water — so regardless of what you choose, be aware that your decision also impacts them. However, in no scenario will you be sent to jail for not paying your debts, so you’d have that going for you, at least.

Options for Dealing with Debt

Nothing positive happens from ignoring debt. Before you decide how to handle the debts that can’t fit into your budget, prioritize the most important loans and keep paying those. Make sure to regularly monitor your credit report to see which of your debts are being reported and to whom.

Taking a Proactive Stance

When you realize you can no longer make your payments, proactivity is your best chance at reducing negative consequences.

For credit card debt, reaching out before you miss your payment could afford you a one-month grace period or require you to only pay interest for the month. If you’re carrying multiple credit card debts, you can ask your creditor about consolidating your debts into one card and interest rate.

If your student loan payment is more than 10 percent of your monthly income, you can also restructure your payment plan at

For a mortgage issues, you might be able to refinance, get a forbearance, short-sell your home or work out an alternative repayment plan.

Unless you desperately need a car for work and general life needs, you could sell the car yourself and take out a personal loan to cover the difference you owe. This of course doesn’t solve your troubles but it does keep your credit score from being gouged (for the moment) like it would be if you turned your car over to the bank or to the dealer.

Next Steps

If you’re still struggling to find a way to make headway on your debts after reaching out and being given grace periods, your options are likely limited to either debt settlement or bankruptcy. Both options definitely hurt your credit score but they present a chance to get back to square one and get your financial life (and mental stress) in check.

The debt settlement process includes working with a company that negotiates with your creditors on your behalf to reduce your overall debt sum. However, it’s important to note that debt settlement usually only works with unsecured debt, like credit cards. You can get a quick understanding of the general debt settlement process by looking at reading FAQs on how Freedom Debt Relief works as most reputable debt settlement companies operate similarly.

Bankruptcy options are will include Chapter 7 and Chapter 13. The main differences between the two are that Chapter 7 can wipe out all your (unsecured) debts as long as you don’t have too much income while Chapter 13 allows debtors to keep their assets (house, car, etc.) as long as they follow a court-ordered repayment plan based on income, expenses and debt types.

While certainly not an exhausting guide on what happens if you don’t pay your debts, hopefully the above information persuades you to face your debt. Nothing good comes from waiting. Make a plan and take back control of your life!