These are difficult times for our economy. Each one of us is feeling the pinch due to increased cost of living. It is getting very difficult to make ends meet. In difficult times like this it is very easy to amass a huge credit card debt. It can happen to anyone. Even to people who have been financially responsible. “Can I just don’t pay my credit card bills?” is the question many individual ask themselves and friends. This option is very much there. It also will give you some extra cash for few months ahead. But following are few of major problems you can get yourself into if you stop paying your credit card’s monthly payments.
Collection Calls
This is most scary part of Credit Card Game. Credit Card Companies will constantly call you and demand their money back. Collectors may call you 5 – 7 times a day. They will call you at home, They will call you at work and they will call you on your mobile phone too. There have been some reports that collection agents have been calling bosses, co-workers, and family members (which amounts to harassment and is not legal). They go to any length to get you on phone and when they get you on phone they use a lot of psychological techniques to lure you into giving them checking account numbers and other banking information. They will use every trick to make you pay. One of the well known methods is that they intimidate and threaten you by telling you that they will take your house, car etc. Or they will bring police to your home. all this can be very stressful on some people. You will also start getting letters in the mail from them that may eventually turn more demanding.
Don’t get intimidated by them, Know your rights and report any violations to police and seek help. Most of the credit cards are unsecured so no one can take your car, house, furniture, etc. Worst thing these credit card companies can do is… they can really damage your credit score.
Bad Credit Score
If you go 30 days past the due date on any of your credit cards, these credit card companies normally report this to Central Credit Bureaus so these missed payments are likely show up in your credit report and this has a terrible impact on the credit score. Companies, almost all of them will increase their interest rate and future loans may either be refused or available to you at very high costs.
A Bad Credit Score is not good. Anytime you apply for a job, home loan, school loan, car loan, car insurance, They do take a look at your credit score. If you are really in very bad crunch. consider bankruptcy as an option. After some time, usually 7 years, it’s all clean and neat again.
Excessive Interest Rate / Late Fees
Once you start missing your credit card payments, most of the credit card companies start charging “Default Rate”. That is normally highest possible interest rate, about 30%(Check the fine print on your credit card Application form or Disclosure on your Credit Card company’s web site). They also start charging late fee penalties ranging between $20-60. if your balance exceeds the credit limit, which normally does, there will also be an over-limit fee which would be charged on daily basis.
I would recommend that you contact each of your credit card companies and ask to have your credit card account closed. This action will stop interest from accruing i.e multiplying. They will tell you that they can decrease your interest rate or they can allow you to make a very minimal monthly payment. some even offer a $3 per month payment plans but this is rarely more than a trap. You will only end up throwing money away as you will only be paying the interest payments and a debt will continue to grow. They will eventually close the account themselves anyway. So it is in your best interest that you do it yourself as it will save you some(depending on your balance $100 to $10,000) money at the end. Ask for a final bill from your credit card company and when you receive that then just try to pay a certain amount on each bill if possible but I recommend that put them aside and concentrate on your mortgage and other liabilities like car payments, children education.
Once you start earning more income, you can either try to pay off the balances of the closed accounts little by little. If you can arrange some extra cash at the end you can also contact each credit card company directly and make them an offer to pay a certain percentage of the balance owed i.e 20% to 50% (think about your offer before you call them). If you choose to do this, stay firm on your offer and document everything. Do not send any payment to them until they send you something in writing that they will mark the account paid in full (keep all documentation and proof of payment).
Most Credit Card companies will accept this because they feel that something is better than nothing. They might also make a counter offer but stay firm and tell them that it’s all you can afford. If they say “No” than don’t worry and say “thank you very much” and move on to the next credit card company. It is most likely they will call you up to accept the offer.
It is also a very good idea to consolidate your debt on one credit card account and then make minimum payments.
Legal Action
Eventually, if a credit card debt becomes very delinquent, Credit Card companies might take legal action course which can result in liens, garnished wages or any other legal judgements requiring you to pay your debt. However, credit card companies would normally try to avoid this situation because this is a very long, complicated and expensive process. But nevertheless, legal action does happen.
Just to debunk a myth, credit card companies generally do not freeze bank accounts. They would first need to have a court judgement against you. This whole process costs them money and it is rarely done by credit card companies. So, don’t worry, no body can put you behind bar, take away everything from you.. there is always help available. don’t worry.
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.
Tim Ramsey
I believe this tips will go a long way to help folks who feel trapped under credit-card debt.
However, the best advise is to have no CREDIT CARD. Be STINGY with your expenditures, and generous with SAVINGS.
If you don’t have it, don’t spend it. Nice post.
Nigerian Entrepreneurs last blog post..Why Do You Blog?
Good post.
The killer is the late fees and the accumulating interest. The phone calls are a real pain as well. Especially if you’re at work or with friends. And as for your credit rating. It depends how many you’ve missed. But if you go AWOL expect the worse.
Best advice I ever got was to use a credit card as a credit card and pay it off each month. Using it as a lone is not a great idea unless you’ve gone for a 0% balance transfer which can be money management genius.
Talk About Debts last blog post..Poetry Competition – It’s called Debt Free – Poetry to inspire action
@Talk about debt.. I have written a new post based on your advice..
R. MAK.s last blog post..A Quick Guide to Credit Card Basics
I always read your blog in high spirits. Thanks :)
There is one part of this article that I find troubling and incorrect.
When closing your credit card accounts, the accounts don’t stop accruing interest or late fees.
In some cases it will cause your interest rate to skyrocket at a “Default Rate”.
That part is truly some bad advice.
So, okay…. I recently had the craziest thing happen with a credit card company… I didn’t realize I was setting up my payment for a future date, and I scheduled it to pay my balance (It was small like 90 bucks or something) but I scheduled it for a a day out past the due date (their website actually defaulted to this)
So, I assumed I was in the clear with that CC account, and then they started calling my phone… I told them I had paid and that’s when I found out about the accidental scheduling issue… SO… I said, well just cancel that… they informed that wouldn’t be possible, and unless I paid the 8 dollars or whatever they would be reporting me to the credit bureau!
I told them that my payment they wouldn’t cancel paid the balance in full, and they said they would just credit that to my account…
the point of my story? If these people are gonna fark up MY credit then they need to get their business together… don’tcha think?
Jamies last blog post..Editing is WOW!
THANKS FTHE WORK fark
I PLAN TO USE IT IN REGARD TO FARKED UP BANKS AND CC CO S.
THANKS
Dear All,
Can any one from the bank explain me that what kind of action the bank will take for not making the credit card bill payments ?
I like to share one case of my friend who misuse the credit card for his royal life. But see the action the bank taken on him.
My friend has made a purchase for Rs.60,000/- & above and didn’t made a payment for more than 2 months. The bank people called him for settlement and after face to face discussion he was asked to pay only Rs.8,000/- as settlement & cancelled his card. There is nothing to pay after this.
2nd case – same friend has got another card from other bank & he made the same thing. He was called & were asked to pay only Rs.6000/- as final settlement.
As this kind of news make the persons like me who pays the full payment in time to think not to make any credit card payments. For nothing there are the people who enjoy and this bank people will not take any action on them. Why not the bank list those people & see that they should not get any card from any bank & other loans for them.
Also i request the bank should see the person who are sincere in their payment & encourage them with additional benefits.
Kindly MNC bank should answer my query.
Warm regards,
Vijay
How come when you don’t pay medical bills or other miscellaneous charges, they report negatively to the credit reporting agencies, but when you are on time, they refuse to put anything positive. They scam everyone into opening credit accounts without approval and I am sick of it.
They are scaring me to death! Help!!!
Can a crerdit card company garnish my husbands wages on 2 1600 Capital One Accounts?
Hey chill……………
watch
http://video.google.com/videoplay?docid=7065205277695921912
Money is really a myth….credit….what a joke
Why do you say the Credit Card companies will call you? Debt collection companies that own the debt are the people that call you. As soon as a credit card is defaulted it is usually sold to our government who in turn sells the debt to a debt collection company that profits off the debt by calling the people that have it and harassing them until they pay. Even though most of it isn’t even their debt. Over half of the principle debt is fines, late charges , and huge interest rate increases accumulated for the wait period before the card is considered defaulted. Its a very profitable business knowing that most of these people wont pay off the debt in their life times unless they claim bankruptcy.
If ordered by the court to pay what is owed in full and I’m not able to do so, what could happen to me. We provided the court a hardship letter expIaining my situation when served with a court order. I have been self employed for the past 19 years and the sole provider for the past 5 years for my family and have always paid my bills on time until last August as a result of the downward economic spirial that has effected our income. I declined any payment plans since the thought of not knowing if there will be enough work for me to cover mortgage and other primary bills.
It is a nightmare. First you become disabled and then lose your job. You apply for SS disability and tehy drag it out. And you try, here you are, sick, out of work, trying to survive. You use the credit cards, and when you decide to cut them up, they are maxed out. Have to fix the car so I can still job hunt. Can’t get a job dressed like a hobo. Can’t get a job anywhere. You tell these companies from using the insurance they offer you are unemployed, and then they make the payments, and then you tell them you are disabled, and they start payng those payments except for the ones that weasel their way out of the agreement by adding a new policy, and they watch you go deeper in debt until you are completely maxed out. Then, you have no choice but to file bankruptcy, and it is obvious that there is misuse of the cards long before they get that deep. It is like an addiciton, for you use them, clinging to hope and trying to have faith in things will get better, and then the nation gets worse, and disability still drags it out. Now they got you when you sign under penalty of purgery to do the bankruptcy, and then the trustee can not give you a discharge on some or all of it, and even maybe have you prosecuted for you are still out of a job promised by the President would happen this year as well as SS disability. SO they just let you hang yourself with their credit to you. And after being a customer for 10 or more years you would think they would take action when they see you are making mistakes you know. There has got to be a way out of this. It is like entrapment or something. It becomes an addiction to use them to survive as well as try to better yourself and contnue to fail due to no jobs as well as SSA not doing theres either according to the laws written. Anyome out there know any ways out? I mean like, I still have to try to find a way to provide for family with no credit, no job, and no health and no education to be able to run one of those losing home based scam jobs in the paper or on the internet. This is crazy. And yet, government can borrow money with no intention of paying it back too, right? Wow. May as well go yourself in in this messed up qorld and there are millions in the same boat. And if you don’t have family to fall back on, then it is over, right?
Hey Stan C.
Your not alone. Sounds real similar to my families situation.
Wife – cancer. Me – foot and back med. issues and then a brain leisan at 59.
Tried the cccs help then couldn’t even pay that.
What are they going to do if you just cant pay a cc unsecured loan?
Bad credit…? who cares…. can’t ever borrow any more EVER.. So what.
I’m living on cash ….. cash only…. What a novel idea.
Bankers and lawyers… the Devils webb…
19 Billion $$$ secret bailouts from our Pres. to these sleasy financier bastards.
Hooking our kids on CCs even before they’re out of school.
Please, go ahead a make it so I (we) can’t use CCs any more. You
do us a favor.
There’s a special place in Hell for you if you don’t change your crooked ways.
(Mill stone tied around your neck and thrown into the sea… read Bible)
useless site. No replies, no response. SO where does a person get advice? How do you know your chapter 7 attorney is watching your back and protecting you? How do you know if your attorney isn’t going to put the nails in your coffin?
in nigeria, is it true if you are unable to pay your hospital bill can they put you in jail?
You have talked about many engaging points in this post. I came across this by using Google and I have to admit that I am currently subscribed for your website, it is very great ;)
Capital One– what a bunch of crooks! My 85 year old mother got herself in $62,000 of Credit card debt. she was handing her cards out to other people to use, trying to help them. Needless to say when it got bad none of the people she gave her card to offered any help! More Crooks, called friends? That was 6 years ago. She refused to file bankrupcty, old scool, you pay your debts. She mortgaged her home to pay the cards off. Her house was paid off till them., now she has a $753.00 mortgage payment coming out of her $923 month social security income. SAD!
Five years later she fail and broke her hip that is when i found out she had $26,000 in credit card debit. Most of the cards had protection coverage and paid the balance off. Capital One did not. They have called her day and night wanting a payment. The payments she had been making for years to them had 80% of the money going to the company for late fees and interest charges. I took over her social security check by filing for payee Rep with social security in March 2011. I called the companys and told them she will not be making any more payments and her credit score was a 582 already and that was not a comcern. note she has always had excellent credit her whole life, they continued to harress her with phone calls, Basterds!
Now here the scary part– my sister lives with my mother– some how they got into my sisters checking account and took out $500 dollars based on what mom owes them??? My sister’s checking account is at a totaly different bank and Mom’s name is nowhere on the account. How they did it is beyond me. Crimial actions? I think so! We’re contacting a lawyer and the better bussness bruro to see where we need to go from here. Like most people i never worried about my money in the bank till now! It may be time to bury it in the back yard, banks are not to be trusted! I personaly was told by a manager at Mom’s bank,that anyone can present a draft on an account and the bank is requiered to pay it. No S**T!
you can file a stop payment on the company and the bankk will charge you a fee for doing that, next month you’ll have to do it again and again and again cause the credit card companty will keep sending them, foreever. So when you go to sleep tonight know tha tyour money is not safe in a bank anyone can take it for any reason and your bank will hand it over Happly to them. Sad but true!
Three years ago when I leave USA to go to see my relatives in my former country Portugal. I have som trouble and portugals authorithy put me on jail. In USA the bank take my house (because nobody paid the bill over 6 months) Also I have to pay some credits to another banks (credit card) $95.000 . Now Im afraid to return back in USA because they can put me in jail… it’s that thrue???????????
Can anyone help me with some suggestion?
I think the best thing to do is to work out an agreement with the credit card company to pay back the account at a lower percentage rate (due to a possible hardship circumstance)
Also try to pay off the lousy credit cards in full by using the loophole of reverse mortgage!! Try to use all angles to get rid of these pesty credit cards that deplete your savings …month by month.
There is also another loophole of using your cash balance in your life insurance that has built up….a person can have a considerable amount of cash balance that is your own money actually and the insurance company will let you borrow from your own money at a low monthly loan.(the money you pay every month goes back into your cash balance life insurance account)
Some 401ks have a benifit where you can borrow from your own money and repay them and guess what the monthly payment goes back into your 401k…….this is a good loophole to use to pay the credit cards off too.
There are ways to beet the system of the high interest credit card loans or as I call them the juice loans!!!!
Kind regards.
Anthony (Toto) Lucchese
The article says about closing each credit card account. They will close them, but they give you a deadline (90 days) to pay it off, if it’s not paid off in that time, the account is re-opened and you will be charged when it is re-opened. If you have a small balance, it’s no big deal, but try paying off big balances on multiple cards witin 90 days is almost impossible on my income. government protected bastards crushing our economy!