In short, if you are unable to pay your debts, creditors can MAKE YOUR LIFE MISERABLE!
The first thing that happens when you miss payments is that you are barraged with demand letters, and then, worse, never ending phone calls.
As the collection process escalates, the calls increase, and finally the acount is turned over to a collection agent or attorney with instructions to sue you and get the money.
A lawsuit begins with the personal service of papers called a SUMMONS AND COMPLAINT which will be handed to you or left at your home with someone over 18 years of age. This can be very embarrassing if done at work or in a public place. Once the papers are served, you have a period of time (usually about twenty days from receipt of the papers) to file an ANSWER with the court disputing the debt if you can (many cannot because they do indeed owe the money), and then the matter will be set for a trial at a later date. If you file an answer, you must pay a court filing fee. Also, if you have many debts, you may have multiple lawsuits to juggle at the same time.
If you do not file an answer, or lose the case, the Court will enter a JUDGMENT against you. Then the creditor has POWER to take the money from you. This is done in one of three ways: garnishment of your paycheck (25% of take home), garnishment of your bank account (100%), or recording a lien against your home. As long as a judgment exists, it gains interest and gets bigger every day.
Sometimes the creditor will also serve you with a series of questions called INTERROGATORIES or set a RULE 69 HEARING which you must attend in order to find out where you work and where you live and where you bank so they can collect their money. Failure to respond to the Interrogatories or attend the Rule 69 Hearing can result in you being held in CONTEMPT OF COURT and a WARRANT FOR YOUR ARREST can be issued.
The above described proceedures take a while, and are IMMEDIATELY STOPPED by the filing of a bankruptcy. This can be done at any point in the lawsuit process, but it is always best to get at it early to prevent the stress and sleepless nights that the collection process causes most folks who are worried and scared about what to do.
It is like many problems in life--the sooner you realize you have a problem and TAKE ACTION the easier the problem is to fix and the sooner you can enjoy a fresh beginning of your financial future.