Drowning in Credit Card Debt

In the current economy, many people may be relying too heavily on credit cards to meet their basic needs. Many credit card holders face the reality of only making the minimum payment every month, a situation that has bleak consequences. What is worse is that many people cannot afford to make a payment at all. For those individuals, it may be tempting to ignore the credit card debt; but, rest assured, it will not go away on its own. A recent article warned of the dangers of failing to make payments on credit card balances all together, and the potential consequences of choosing to do so.

Consequences of Missing a Payment

For those who fail to make a payment when their credit card bill becomes due, a negative effect on their credit score may be the least of their worries. The longer the trend goes on, the more likely the card holder will face increasingly significant penalties, like a lawsuit. One thing is for sure: as long as the debt exists, debt collection efforts will be ongoing.

If the cardholder has missed the latest due date on their credit card bill, credit card companies will likely use tactics such as phone calls, emails, or letters to attempt to collect a payment. These communications will initially be cordial and helpful and become more aggressive as time passes without a payment. The company could report the account as delinquent to credit reporting agencies soon after a payment is missed, but are more likely to do so if a month or more has passed since account has been delinquent. If more than two months have passed, late fees and interest will continue to accrue on a card holder’s account, even though the company will likely have canceled the card by this stage.

A card holder facing this situation should contact the company if they know their payment will be late in order to increase the likelihood that the company will work with them. In any event, the card holder should not ignore or avoid communications from the company regarding a past due account. Card holders may attempt to negotiate a payment plan or a hardship plan if the circumstances warrant it, though he or she may have to pay a fee depending on the amount of time that has passed since their last payment. Those who have had their account closed can attempt to set up a payment plan in order to have it reactivated.

Next Stages

If the company has been unsuccessful in obtaining a payment for an excess of about three months, they will likely turn over the account to a debt collector. Credit reporting agencies will be notified of the same. Though debt collectors must abide by certain laws in their communications, they will use all means of communication in an effort to obtain a payment. Card holders here can offer a payment plan or a settlement payment, but should verify their debt and confirm the collection agency with the original company first. Any agreement should be in writing and include terms that prevent a lawsuit as long as payment are being made, and that the card holder’s credit report reflects the account as settled in full.

In the event the debt collector is unable to contact the card holder, a lawsuit may be filed. The cardholder will have to appear in court regarding the debt, where he or she can dispute the debt but may still face wage garnishment or asset seizure.

Bankruptcy Attorney

Too many people find themselves in a desperate financial situation and wait to find a way out. If you are struggling financially with credit card or other debt, an experienced bankruptcy attorney may be able to help you. The attorneys at Hoffman, Larin and Agnetti, P.A. have successful experience representing clients in bankruptcy matters in Dade, Broward, and Monroe Counties. Contact us today to schedule a consultation to discuss how we can help you obtain debt relief.