Are you having difficulty making ends meet with your credit card payments? You’re not alone. Many folks experience the same problem. It can be daunting to manage ballooning balances and the fear of debt collectors.
But don’t worry — there are options available to help you get back on track with your credit card debt..
Read on to learn more about the consequences of missing credit card payments. You can also learn what you can do to get your finances back in order.
What Happens When You Stop Paying Your Credit Cards?
Neglecting to make payments on your credit card balance can cause you to incur penalties. These penalties may include additional fees and higher interest rates. Additionally, these penalties will ultimately increase the total debt amount. In other words, the longer your debt goes unpaid, the harder it is to get a handle on it.
Not paying your bills can also have a detrimental effect on your credit rating. A poor credit score can make it more difficult to borrow money in the future. It can also make it harder to rent an apartment, open new utility accounts, and even get certain jobs.
The consequences become more serious the longer your debt goes unpaid. Your account will eventually be sent to an internal collections department or a debt collection attorney. Alternatively, it may be sold to a third-party debt collection agency. They will contact you repeatedly to get you to pay what you owe.
Ultimately, legal action may be taken against you by debt collectors. If you lose a debt collection lawsuit, you could face court-ordered collection efforts such as wage garnishment.
In summary, neglecting to fulfill your credit card obligations can bring about many negative repercussions. The good news is there are options available to help you control and diminish debt without having to go down the path of not paying at all.
Key Takeaway: Neglecting to pay credit card bills can bring about grave repercussions, including additional fees, penalty interest rates, and the possibility of being pursued by debt collectors.
Understand Your Rights
As a borrower, it’s vital to be aware of your legal rights regarding credit card payments and debt collection.
The Fair Debt Collection Practices Act (FDCPA) provides certain protections for consumers who are facing action from creditors or debt collectors. For example, any letters sent by a debt collector must include information about the debt. This includes how much you owe, who you owe, and how you can dispute any claims made against you within 30 days of receipt of the letter. Debt collectors are also prohibited from using any type of menacing tactics or intimidation when attempting to collect on a debt.
It’s also important to understand your rights when it comes to a debt lawsuit. You should respond promptly to any lawsuit. Otherwise, default judgment may be entered against you without a chance for defense. Usually, you have 20-30 days to respond. And to ensure the best outcome based on your specific situation and any local laws governing collections practices, it’s a good idea to consult an attorney who is well versed in consumer protection regulations.
Key Takeaway: When it comes to debt collection and lawsuits, it’s important to understand your rights and responsibilities. Don’t ignore communications from creditors and collectors, and always respond to lawsuits within the legal time frame, as failing to do so may have dire consequences. It’s also important to seek the counsel of an experienced debt relief attorney on how best to safeguard yourself.
Consider Alternatives
Facing a large amount of credit card debt can feel hopeless. But there are ways to resolve your debt that don’t involve ignoring the problem and letting it pile up further.
Debt Consolidation
Debt consolidation is a strategy to combine multiple debts into a single loan or payment, typically with a lower interest rate than the original debts. In the case of credit card debt, a person can use a debt consolidation loan to pay off all of their credit card balances and then make one monthly payment to the loan provider.
Debt consolidation loans require collateral, such as a home or car title. You could lose this collateral if you default on the loan. You also need fairly good credit to qualify for a loan at an affordable rate. So debt consolidation may not be an option if you’ve missed many card payments and your credit has suffered as a result.
Debt Settlement
Debt settlement negotiates a lower balance with creditors, often with a debt relief attorney’s help. It’s for those struggling to keep up with payments and unable to pay off their debts in full.
The debt settlement process usually involves a third-party negotiator, such as a debt settlement attorney, who works on behalf of the debtor to negotiate with the creditor a new balance and payment plan. Typically, debt settlement negotiates a new payment plan on a reduced balance or a lump-sum payment. The debtor can pay this reduced amount to settle the debt.
While debt settlement can be a way to reduce debt and avoid bankruptcy, it can also have negative consequences. Settling a debt for less than the full amount owed is usually noted on your credit report and may harm your score. Of course, the string of missed payments leading up to the settlement will have already caused major damage to your score anyway, along with having a high debt-to-income ratio. You may also have to pay taxes on the forgiven portion of the debt. In general, though, getting a large portion of debt wiped away is often worth these drawbacks, as the savings may outweigh the potential downsides to the process.
Before pursuing either of these options, be aware of potential scams related to debt relief services. Research debt settlement companies before signing any agreements. This can help you avoid unscrupulous companies that large upfront fees and offer empty promises.
Key Takeaway: If you’re struggling to repay credit cards, there are options available to resolve your debt. Two popular options are debt consolidation and debt settlement. However, you should beware of debt relief scams and work with a reputable attorney.
Seek Professional Help
If you’re unable to pay off your credit card debt on your own, it is important to seek professional help. So consider working with a debt relief attorney who understands how to tackle credit card and other debt. An experienced professional guide can explore all avenues to get you out of debt quickly, without putting yourself at greater financial risk.
Additionally, with their expertise comes objectivity—something which most people lack when facing overwhelming personal finance issues like these ones.
Some of the services an attorney can provide include:
- Legal representation: If you are facing a lawsuit or other legal action related to your debt, a debt relief attorney can provide legal representation and help you defend yourself against the creditor’s claims.
- Debt settlement negotiations: A debt relief attorney can also negotiate with your creditors to settle your debts for less than what you owe.
- Debt consolidation: A debt relief attorney can help you explore options for debt consolidation, which can help you combine your debts into a single payment with a lower interest rate.
- Credit counseling: A debt relief attorney can refer you to credit counseling services, which can help you develop a debt repayment plan and provide education and resources to help you manage your finances.
- Bankruptcy: If necessary, a debt relief attorney can help you file for bankruptcy and guide you through the process. Bankruptcy can provide relief from debt and protect you from collection actions, such as wage garnishments and creditor harassment.
Overall, a debt relief attorney can provide legal advice and representation to help you deal with your debt problems, as well as develop a strategy to manage or resolve your debts. It’s important to consult with a qualified attorney who has experience with debt relief and consumer protection laws to ensure that your rights are protected and that you receive the best possible outcome.
Key Takeaway: A debt relief attorney can help you manage your credit card debt, negotiate with creditors, and create strategies for reducing your overall debt burden.
FAQ
If you stop paying your credit cards, the debt will eventually be sent to collections. You’ll begin receiving calls and letters from debt collectors demanding payment. Unpaid credit cards may lead to a lawsuit from the creditor or collection agency. Late payments can damage credit scores for years, even after full payment.
A debt that remains unpaid for seven years is usually removed from the credit report. Debt removal from credit report after seven years doesn’t mean that the debt is forgiven or that you no longer owe it. The creditor or debt collector may still attempt to collect the debt through phone calls, letters, or legal action.
The short answer: Yes. Depending on the situation, creditors may take legal action to recover unpaid debts. Missed payments lead to negative marks on credit reports that can limit future borrowing. In other words, not paying your credit card bills can result in financial and legal challenges.
Contact Tayne Law Group Today
If you’re struggling with credit card payments, Tayne Law Group, P.C. may be able to provide legal advice and solutions to help get your finances back on track. Contact us today for a free, no-obligation phone consultation about our services and how we may be able to help resolve your credit card debt. Call us toll free at (866) 890-7337 or fill out our short contact form and we’ll get in touch! We never sell or disclose client information. All calls remain confidential between you and our team.
