Repossessions, wage garnishments, property seizures, foreclosures— measures which strike fear into the heart of every consumer. But how do these methods of recovery play out in the real world, and whom are they used against?

The general assumption is that overdue debts will result in drastic recovery measures. Sure, if you've put up property as collateral on a loan which you are unable to pay, it will typically be seized or repossessed. But the same does not necessarily hold true for unsecured debts such as credit cards and deficiencies.

In reality very few creditors will ever push for garnishment on small unsecured debts. Garnishment and seizure are a creditor's most effective weapons to collect an outstanding debt, but they are also very expensive and time-consuming to the creditor. While it is within the creditor's legal rights to pursue collections through any of these means, the cost of recovering a debt often exceeds the amount of the debt itself, and so it's not always cost efficient to force a collection.

Sadly enough, in the United States alone thousands of bankruptcies are filed every week in response to collection efforts on unsecured debts under $5000. Consumers are so intimidated by creditors that they fold under the perceived pressure, resorting to bankruptcy as a means of escaping an unsecured debt. If these same consumers had simply ignored the threatening letters and intimidating phone calls, they would have discovered that most creditors are all bark and no bite. Bankruptcy is arguably the worst type of negative listing you can have, and it is sure to wreak havoc on your credit for the next ten years. You should therefore consider bankruptcy only as a last resort, and possibly never as an option to escape a relatively small, unsecured debt.