What Happens If You Don’t Pay Your Furniture Bill?

Buying furniture on credit can seem like an easy way to get the living room set you’ve always wanted. But those “easy monthly payments” can quickly become a burden if your financial situation changes. Unfortunately, the consequences of not paying your furniture bills can be severe.

Falling Behind on Payments

It starts small – you miss one payment because money was tight that month Then another Soon, you’ve missed several payments and the fees and interest charges are piling up.

The first consequence is usually a late fee, typically $25-50 per missed payment. You’ll also receive past due notices demanding immediate payment. If you continue to miss payments without contacting the store, the account may go to collections.

Repossession of Furniture

For in-house financing deals, the biggest consequence of non-payment is repossession. If too many payments are missed, the store can legally seize the items you haven’t fully paid for yet.

This means workers will come to your home and take the furniture back, with no warning. You no longer have rights to the items, even if you made a down payment. The humiliation of having belongings forcibly removed is motivation to avoid default.

Damage to Credit Score

Missed furniture payments also damage your credit. Each late or missed payment is reported and will cause your credit score to drop significantly. Even after you get caught up, the delinquencies stay on your report for 7 years.

A low credit score makes it much harder to qualify for future loans, credit cards, apartments, and more. Your options become limited.

Potential Lawsuit and Wage Garnishment

If you continue to ignore a severely past due furniture debt, the next step is getting sued. The store can take you to court for breaching the financing contract.

If they win a judgment against you, the store can pursue forceful collection methods like levying your bank account or garnishing wages. Portions of each paycheck will be confiscated until the judgment is satisfied.

What Happens Once Furniture is Repossessed?

Losing furniture is upsetting, but the debt may not disappear. Here’s what happens next:

• The store sells the used furniture and applies the sale amount to your balance. But used items sell for much less than original cost.

• You’re billed for the remaining “deficiency balance” – the difference between sale proceeds and what you still owed.

• The deficiency balance stays on your credit as an unpaid debt. The store pursues collection on this amount.

• You may be sued for the remaining deficiency unless you can settle it with the store.

Repossession does not mean the debt goes away. Expect aggressive collections efforts to continue.

How to Avoid Defaulting on Payments

No one wants their belongings forcibly seized or wages garnished over an unpaid bill. Here are proactive steps to avoid defaulting on a furniture loan:

• Prioritize payments by cutting discretionary spending to free up cash for the furniture bill. Get your account current.

• Ask the store about refinancing the loan to lower monthly payments.

• Sell other assets like electronics or unneeded furniture to raise cash for the bill.

• Return newly purchased items within the grace period if allowed.

• Consult a nonprofit credit counseling agency to negotiate alternate repayment plans.

• Make a formal offer to the creditor to settle the debt for a percentage of what you owe.

• As a last resort, filing bankruptcy stops collections, but damages credit further.

Communicating with the store directly and refinancing the loan if possible are better initial options than ignoring the debt until repossession occurs. Don’t wait until it’s too late.

When Can the Furniture Store Sue Me?

For unsecured debts like credit cards, a creditor must sue you and win a court judgment before seizing your assets or garnishing wages. The store can’t simply take your property or money because you owe a debt.

Secured debts like furniture financing are different, since the store can legally repossess the collateral. But once they’ve seized the furniture, additional steps like suing you are still usually required to collect on any remaining deficiency balance.

So if you owe more than the used furniture sells for, expect legal action to recover that amount unless you proactively settle it first. Don’t assume repossession is the end.

Is the Furniture Company Allowed to Call My Job?

Yes, creditors and collection agencies are generally allowed to call your workplace to request contact information and ask that you return their calls about an unpaid debt.

However, under the Fair Debt Collections Practices Act, the caller may not discuss specifics of the debt with your coworkers or employer. The calls cannot be excessive to the point of harassment at work either.

To avoid calls to your workplace, inform collectors immediately not to contact you there. Send a cease and desist letter via certified mail stating you wish to handle the debt outside of work hours.

If calls persist, you can file a complaint against the company with the Consumer Financial Protection Bureau for violating debt collection laws.

Can My Wages Be Garnished for Unpaid Furniture Bills?

If a furniture company sues you over an unpaid account and wins a court judgment, they can pursue wage garnishment to collect what you owe in many states.

Up to 25% of your disposable pay after taxes can be confiscated to go towards paying off the judgment. Low income workers may receive protection from garnishment under state laws.

Wage garnishment continues until the full judgment amount is paid off. Getting to this point can be avoided by working with the creditor early on to settle the debt or set up a payment plan if possible.

Is There a Time Limit for Collection on Old Furniture Debt?

Yes, the statute of limitations sets a time limit for how long unpaid furniture debt can be legally collected:

• Written contracts: Between 3-6 years in most states, depending on state law. The clock starts when you miss a payment.

• Oral contracts: Typically around 2-4 years from the last payment or last activity on the account. Varies by state.

• Judgments: Usually 10+ years, but sometimes longer for renewed judgments. Time varies.

Even with expired debt, collectors may still attempt contact to ask for payment. Don’t admit liability or make payments on time-barred debt, as that resets the clock. Know your state’s laws.

What if I Can No Longer Afford the Payments?

If your financial situation changes and furniture bills become unaffordable, act quickly to avoid repossession and collection. Consider these options:

• Refinance the loan: Ask the store about extending the repayment term to reduce the monthly payment.

• Hardship program: Request a temporary reduction or suspension of payments if you face unemployment, illness, or other short-term hardship.

• Return items: Voluntarily return any pieces you can live without to reduce the balance.

• Sell the furniture: You can try to sell the items yourself and pay off the account to avoid repossession.

• Debt management plan: Work with a credit counseling agency to negotiate with creditors.

• Bankruptcy: As a last resort, filing Chapter 7 or 13 bankruptcy stops collections and can eliminate furniture debt, but damages credit further.

The sooner you take action, the more leverage you have. Don’t wait until an account has been sent to collections. Communicate with the furniture store proactively to explore options based on your situation.

The Bottom Line

Paying for furniture on credit provides instant gratification. But defaulting brings quick and severe consequences that can disrupt your financial life.

Communicating with the store before payments spiral out of control is critical. With early action, repossession and legal judgments can often be avoided.

Prioritize furniture bills to keep your account current. Buy only what you can realistically afford and make payments on time. Handled responsibly, furniture financing lets you furnish your home in style without harsh penalties.