Consequences Of Not Paying Credit Card Bills
- Cardholders can contact the credit card company first if they know they will be late making payments. Companies are more likely to work out a payment plan if contacted by the cardholder. Additionally, cardholders should not ignore calls from creditors. It is a good idea to explain the situation and negotiate a payment plan.
- 60 days delinquent: Credit card companies will pass the account to a collections department. Collection will become more aggressive and the lender will report the delinquency to a credit reporting company, if they have not already done so. Cardholder will likely have to pay a penalty, but may still be able to negotiate a payment plan.
- 90 days delinquent: Credit card company will likely close the account and become even more aggressive in pursuing collection. Late fees and interest will accumulate. Cardholder can agree to a payment plan to restore the account.
- Charge-off status: Credit card company will write the debt off as uncollectible, report status to credit reporting company, and may sell the account to a debt collector. Cardholder can negotiate a payment plan or settlement. If possible, it may be more beneficial to negotiate with original creditor. The settlement should be in writing and settle the account in full.
- Court: The credit card company or debt collector can sue to collect the debt. If they win, a judgment could allow them to garnish wages or seize assets to cover the debt. Cardholders should appear in court if sued, otherwise the creditor will win by default.
Janna Herron, What If You Stop Paying Your Credit Cards?, https://today.msnbc.msn.com/id/43690720/ns/today-money/ (accessed July 31, 2011).