Have you ever wondered what would happen if you just….didn’t pay that money you owe? You might think you’d be sued, and you might be right. But you also might not. Lending and repayment has a lot of laws attached to it, but there are plenty of times when these matters fall into a murky, grey area. If you owe an entity money which you have not repaid, you might not be sued or get in any legal trouble, but there still might be consequences for your credit and general state of mind. Then again, there are no sure outcomes in these matters.
Let’s say that you are a person in your early 20’s. You decide to enter grad school, but after a month you drop out because of family issues. The question is, how much of your tuition should you pay or have returned? Let’s say, in this case, the school asks for $9,000. You could pay it, but it would take all of your savings, plus some. You feel that this isn’t fair, because you attended so little. What options are available to you?
First of all, you could just pay the bill. This would be the easiest option in some ways, but in other ways not so much. You’d use all of your money and set yourself back a long time. The best thing to do before paying would be to call the school and try to work yourself into a better deal. Remember, the people who are charging you your bill, in this hypothetical situation, are human beings. Eliciting sympathy is not a bad mood, and you really have nothing to lose. In fact, budget hours to do this. Talk to as many people as possible. See what you can work out.
Then there’s the option of not paying the bill. What happens then? Actually, there is no way to know. The school could conceivably take you to small claims court, but this is unlikely. For one, it’s hardly worth the time, trouble, and money on their end. For another, it looks really bad for an educational institution to start suing alumni (however brief their time at the institution). More likely, the school would sell your debt to a debt collections agency. Some collections agencies are kind of like bounty hunters, trying to recover whatever they can for the party who you owe money. Others buy the right to your debt and try to get as much as they can. This latter kind is more common and would probably be what you deal with.
You would likely receive calls and letters in the mail. At this point, you could pay the bill, try to negotiate a better price, or ignore the calls and letters. You might have better luck negotiating a better payment with the CA. After all, they got your debt for pennies on the dollar, and they’re just trying to make some profit.
If you ignore the problem entirely, you will probably just get a bad mark on your credit report, and then see your credit score go into the pits. This is a bad thing because it’ll mar your credit history for seven years, before the negative mark disappears forever. You’ve got to decide if it’s worth it to have a bad credit score for seven years, during which time you might want to buy a house or a car or get a loan for another school – all of which will be much more expensive with a bad score. You can dispute credit card charges, but this debt is too big to dispute. It all comes down to what you’re willing and able to handle? Paying the debt or having bad credit. It’s up to you, but you probably won’t be in legal trouble either way.