Wednesday, January 12, 2011

What happens to people who do not pay their credit card debts?

What will happen to me if I do not pay my credit card debts?” This is a very widespread question that a card holder can ask. Usually such questions arise during hard economic circumstances. Many people have used credit cards at least one time in their lives and continue using them very often. Some people have at least 3 or 5 credit cards in their wallets. Credit cards are very convenient to use. They guarantee financial freedom and safety. These cards allow us not to carry too much cash everywhere. But very often people are faced with a number of problems that can occur while using these cards. Unpaid balances continue rising constantly even if you have some problems with your income. It is very important to take some reasonable steps towards paying off your credit card debts. Usually credit card companies can make a settlement and agree to a repayment arrangement. It is very important to show them that you are trying to do something with the occurred situation and do not ignore the problem.

Let us discuss the main consequences you can face if you are not able to pay your credit card debts in time. You have to develop your own plan in order to deal with your debts. You should take this problem very seriously as it is very hard to get out of this delicate situation. Do not think that this problem will simply disappear of its own accord. Be ready that a credit card company will do its best to get money back by all possible means. Remember that if you continue ignoring credit cards payments, it can lead you to serious long-term financial consequences. You can take advantage of the following pieces of advice, but also pay attention to the recommendations of financial advisers or legal councilors.

1. You will get reminders from your creditor. Usually when you stop paying your credit card, you will receive different kinds of reminders from your creditors. Firstly, you will get continuous phone calls. These calls will become more frequent, if you have not still made any payments. Usually collectors make their phone calls 5 to 10 times a day on your mobile phone, home phone or at work. They can find telephone numbers of your neighbors, colleagues and members of the family although it is illegal to act like this. At the same time you will probably get letters by mail reminding you to repay the debt and maybe suggesting some settlement offers. These are the ways of psychological pressure in order to make you pay them the money back.

2. Your delinquent account can be sold to a collection agency. If you continue ignoring the payments for over half a year, then you will get calls from debt collection agencies. This happens because after this period of time some banks usually sell your accounts to a third party which is a collection agency. Such agencies have rights to call you any time of the day in order to demand for the payment. Now it is their responsibility and interest of convincing you to pay the credit card debt you are owned. The collection agency is not a part of the bank and from now on everything they collect from you becomes their profit.

3. Legal actions. Those banks who do not sell your accounts to any collection agency can take legal actions against you. It is a last chance for creditors when your debt becomes too delinquent. They can blacklist your account that will affect your future financial status. When your debt is not excessive, you probably may not be sued for this. The only thing that can be done by this particular bank is that you are not allowed to take advantage of any other facilities of this bank. But if your balance is excessive, the bank has all rights to take legal actions against you to get their money back. If a credit card company or a bank wins the case, they can proceed for wage garnishment or put a lien on your house or other property in order to get their money back. However, many companies try to avoid this process as it usually takes too much time. Besides, court action is a bad publicity for a credit card company. But if the case is at a critical stage, this is the most obvious scenario for the bank or a credit company to recover their money.

Please note that the longer you postpone payments, the more debts you have. As a result you have to pay more and more additional charges such as over credit limit charge and late payment charges. Remember that all these charges will grow fast on your balance on top of all your existing fees and interest rates. Also, not paying credit card debts can really badly reflect on your credit history. Because of this you will probably have some difficulties to get a mortgage, car loan, study loan or any other personal loan when you need it. Also be aware that some companies used to check the credit history of their applicants for a job. So not paying your credit cards debts can play a low-down trick on you if you are looking for an employment. Nowadays you can get an easy and quick access to your credit history. You can take an advantage of the site that is considered to be a part of a family of online consumer credit reporting sites that belong to Experian Company. You can check your credit report and credit score and also to protect yourself against identity theft.

Please remember that you can face all the above mentioned consequences if you do not pay your credit card debts. It is always better to find some solutions to solve your problems than to run away from them. Be smart in arranging your credit card spending in order to avoid financial problems in future. But if you have found yourself in a credit card debt, you should stay calm and get yourself in hand. Your family and your friends must be well informed about the occurred situation so that they can offer you some help. Do not forget to consult experienced financial planner to help you to resolve your temporary financial problems.

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