When money is tight, paying every bill on time may not be possible. Even so, if you avoid paying your bill, there are consequences. Leave the bill unpaid long enough, and you might find yourself in very deep legal water, without some of your assets and wages.
Initial Notices from a Creditor or Service Provider
Normally, if you avoid paying a bill, your creditor or service provider attempts to notify you about the delinquency on your account. The first notice you get is a courtesy reminder that tells you your overdue balance and how you can pay. Eventually, the creditor sends you a demand payment letter. This letter says the creditor or service provider will send your bill to collections if you don't pay. Late payments and delinquencies may drop your credit score.
Collection Notices
The next step for a creditor or service provider after initial notices if you don't pay a bill is to turn your account over to its collections department, or a separate collections agency. The collection department or agency then will begin to send you notices that indicate severe delinquency on the account. These notices typically tell you how to pay, and that the creditor or independent collection agency to whom the debt has been sold intends to file a lawsuit to collect what you owe. Collections also appear on your credit score, dropping it further.
Hearings and Judgment
The creditor or collection agency involved with your debt files a formal complaint, or civil lawsuit, against you in court if you avoid collection notices. The court sends you a notice to let you know the creditor or collection agency has taken action. The notice indicates a hearing date and time the court has scheduled for a judge to hear your case. If you don't respond to the notice or don't show up at the hearing, the judge will render a default judgment in favor of the creditor or collection agency. If you go to the hearing, you can explain why you didn't pay or don't owe and, if necessary, arrange payments with the creditor or collection agency. If you win your argument about not owing, the creditor has to stop pursuing payment at this point. If you lose, the judgment gives your credit another hit.
Garnishment Procedure
Once the creditor or collection agency has a formal judgment against you, the court should send you a formal notice of the judgment. The creditor or collection agency files more paperwork with the court to garnish your assets or wages; to garnish simply means "to take or seize." The sheriff may serve you or your employer with the formal garnishment order, depending on whether the creditor or collection agency has asked for wage garnishment. If the creditor or collection agency tries to seize property, the sheriff should deliver the notice to you. If the creditor or collection agency has opted to garnish wages, your employer should send you a letter indicating the sheriff served the employer with the notice of garnishment. You then have a specific time period, which varies by state, to respond to the garnishment order and contest it if desired.
Seizure
After all the proper paperwork has been served to the right individuals, you have to liquidate or turn over your assets to pay the creditor or collection agency, or your employer sends money from your paycheck to the court to distribute to the creditor or collection agency. There isn't a good way to avoid wage garnishment, but if you don't comply with an order to liquidate or turn over assets, you may be arrested. The arrest is not because you have debt --- having debt is not a crime --- but rather because you are in contempt for not following the garnishment order. It's very rare for someone to be jailed for not paying a debt.
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