25 Sep What Happens If You Don’t Pay Off Your Credit Card Debt?
Getting into credit card debt is easy. Everywhere that you turn, you might see advertisements for one type of credit card or another. Each time that you pay for a purchase at the mall, you might be asked if you want to open up a store credit card.
Even though it’s easy to get into debt, however, it can sometimes be difficult to stay on top of your payments. This could lead you wondering what will happen if you don’t pay off your debt. This depends on the situation and the state that you live in, but these are a few of the consequences that you could be facing if you don’t pay your credit card bills.
Your Credit Could Be Affected
First of all, you should know that once you are 30 days late on your credit card payment, your credit card company can report your late payment to all three of the major credit bureaus. Each time that you are late on a payment after that, they can continue to report this negative information. Even one late payment entry on your credit report can cause your credit score to plummet, and as the situation gets worse, your score will generally get worse and worse as well. This can affect your ability to get future credit cards and loans and can prevent you from buying a car or a house. It can even impact your ability to get certain jobs.
Your Creditors Might Start Calling
Once your payment gets behind, you can count on your creditors to begin calling you, emailing you and sending you letters in the mail. If they have your work number on file, they might call your job. This can be embarrassing and stressful. Just remember that it’s generally best to communicate with your creditors if they do call. Ignoring them can seem easier, but if you communicate with them, they might be able to offer you some options to help you get back on track with your payments.
You Could Face Interest Rate Increases and Fees
Many credit card companies charge late fees when customers are late, so this can just cause your bill to get higher and higher. Depending on the credit card company, you could also face an interest rate increase if you are late on your credit card payment. This means that you could end up spending a whole lot more in the long run than what you actually charged on your credit card.
Your Accounts Could Be Closed Out
Once your account gets too far behind — this is usually around the 90 day late mark, although every credit card company is different — you can expect for the company to close your account. If this happens, you will no longer be able to use your credit card, even if you had an available credit line. If you do choose to open up another account, you will have to apply again, and you may get denied because of your lowered credit score and your history with your credit card company.
Your Accounts Could Go Into Collections
If your credit card company closes out your account and writes off your debt as a “bad debt,” then the account could be sold to a collection agency. This company may aggressively go after you to get the money that is owed. Additionally, you may have an additional entry added to your credit report that states that your account went into collections. This can make your credit score even worse.
You Could Be Sued
Different states have different laws regarding credit card debts and the actions that credit card companies can take against their customers. In some states, you could actually be sued by the credit card company or the collection agency for the money that you owe. If you lose, you might be on the hook to pay additional costs, such as the court costs for the credit card company. Additionally, you will have to worry about hiring your own legal representation and taking time off of work to go to court.
A Lien Could Be Placed Against You
In some states, credit card companies can actually put a lien against your bank account or your property. This means that if money gets put into your bank account, it could go directly to the credit card company until your debt is paid in full. If you have a lien against your property, you will not be able to sell your property without paying back the debt. If you are unsure of whether or not these laws apply in your state, you can always contact an attorney for advice.
As you can see, not paying your credit card bills can be very serious. Even though it can be tough to stay on top of things sometimes, doing your best to at least make your minimum payment each month is very important. Additionally, communicating with your creditors can also help you in this situation. There are also other options that you can look into, such as debt consolidation loans, that can help. Regardless, it’s important not to ignore the situation if you would like to prevent the worst consequences from happening.