People need to understand that there are consequences of not paying debts. Listed below are common consequences of nonpayment:

• The debtor’s credit with the lender may be suspended or cancelled.
• The debtor’s delinquency may be reported to one or more credit bureaus, thereby negatively impacting the debtor’s credit rating.
• All or a portion of the remaining debt may be written off (forgiven) by the lender and then reported to the IRS as income received by the debtor.
• The lender may repossess and sell the debtor’s collateral (car, truck, machinery, etc.) to satisfy the debt. If proceeds are insufficient, the debtor may be held liable for the deficiency.
• The debtor’s mortgage may be foreclosed and property sold to satisfy the debt. If a deficiency results, the debtor can be held liable for it.
• The debtor may be evicted from a rented house for the nonpayment of rent. Their deposit may be lost if property requires cleaning and repairs.
• The lender may sue the debtor and win judgment against him or her ordering him or her to pay the debt. Nonpayment may results in further legal problems.
• If sued by the lender, the debtor may contest the suit, lose the suit and be charged with paying the debt plus the court costs and attorney fees.
• If the lender wins the suit, the court may permit them to garnish wages, seize assets or place a lien on the debtor’s property.
• The debtor may be forced into bankruptcy and then required to relinquish cherished possessions to satisfy the claims of the lenders.
• Financial problems can affect a military member’s, career. For example, he or she could lose their security clearance, a supervisor’s confidence, or even face an administrative discharge.