What Happens If I Dont Pay My Credit Cards – When you have unpaid credit card debt, you may try to ignore the bills that come. You may also be stressed about the impact on your credit rating and your ability to continue paying for essential living expenses such as groceries and personal needs because you may be using credit for those expenses.
You can tell your credit card company, “Sorry, I don’t have the money to pay my bill,” but if you’re unable or unwilling to pay, the consequences are both short-term and long-term. In this blog I will explain the consequences of unpaid debt. Additionally, I’ll suggest some options to consider when you can’t pay off your credit card debt.
What Happens If I Dont Pay My Credit Cards
The reality is that creditors expect regular payments and will explore all collection options when you can’t pay when you owe them. Ignoring a bill means you risk phone calls from debt collectors, a drop in your credit score, and other possible consequences.
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Aside from the stress of finding out what you owe, the consequences of unpaid credit card debt vary by situation and credit card issuer. I’m Scott Schaeffer, a trustee at Mikalos & Associates. Some of the possible consequences are that you will be charged a late payment fee, you will be charged interest, you may have a late payment information on your credit report. The longer it remains outstanding, the more significant the hit to your credit report and the worse your score can get. Your interest rates may increase.
But here are some of the more extreme consequences: You’ll call debt collectors; The account can be written off your credit report which can actually lower your score significantly. Legal action may be taken. They can garnish your wages or seize your bank account. But remember that these situations usually work out over time. Time makes a difference. So the longer things go on, the worse they will get. Late payments can be recorded on your credit report for up to six years.
If you don’t need a new loan, you can wait it out, but the loan won’t go away and you won’t be able to afford a low credit score. So if you are looking to resolve your debt, there are four different solutions. You can try to arrange a payment plan with your credit card provider. Ask them to lower interest rates; Request a reduction in late fees to make it easier for you to manage. But if the debt is old, unsustainable for you, you can try to settle the credit card debt where you are trying to settle it. But make sure that if you do make an agreement, you get it in writing first. Then, if you’re delinquent on these credit cards and you have other debts that you’re struggling with, you may want to try one of the legal remedies, one of the government remedies, which is a consumer proposal or bankruptcy. There is a consumer proposal where you can legally settle your debts together in one monthly payment. If you want to know more, visit us at dot com.
Many people struggle with their credit card bills but somehow manage to make at least the monthly payments. That way, they won’t get out of debt, but they won’t be at risk of further legal action as long as they maintain the minimum payments. But when you stop paying your credit card bills or go over the limit, you’re in default. So what happens?
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When you are unable to meet your loan obligations and in the case of credit cards, this means that you are not making the minimum monthly payment.
If you are unable or refuse to make payments and the loan is not granted in accordance with the terms of your Card User Agreement, the consequences may include:
The more outstanding debts remain unpaid, the more serious your lender will be about collecting them.
If you miss a payment or two, you can expect a polite letter or email from your credit card provider reminding you to make the payment. The damage to your credit score caused by one missed payment can be temporary, assuming you make it up and don’t have other payment problems.
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However, if you fall behind on some payments, your credit card company will send your bill to a third-party debt collector. Each issuer’s internal debt collection period is different, but you can expect a collection agency to get involved when you’re more than 90 to 120 days behind.
If your debt is large enough, your account may also be turned over to a collection attorney.
If you don’t pay your bill, you can eventually expect more aggressive collection techniques on your unpaid bill.
Most major financial institutions in Canada have the concept of writing the right of offset into their credit card agreements. This means they can use the money you deposit into their bank account to pay off any outstanding debt you have. This only applies if you have your credit card loan with the same institution where you bank.
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For example, let’s say you have a TD Bank Visa and you have a TD checking account. In such event, TD may legally charge your bank account up to the full amount owed on your credit card, including interest and penalties.
However, Capital One MasterCard cannot automatically seize funds from your TD Bank account. To do that, Capital One would need a court order.
Credit card companies may sue you to collect outstanding balances. However, lawsuits are expensive and time-consuming, so a default lawsuit is likely only if you owe several thousand dollars. Additionally, the relevant loan limitation period must not have expired. The debt doesn’t go away, but no matter what the collection agency says, there is a risk of a lawsuit.
If you are being sued for credit card debt, you will receive a statement of claim. Suppose you ignore this notice or lose in court. In this case, your credit card provider may be granted an order confirming that you owe. This order gives the credit card company or their collection agent the ability to use more drastic methods to collect money, such as garnishing wages or freezing your bank account.
What To Do If You Can’t Pay Your Bills
After they get a legal order, any credit card company can get a garnishment order. They can ask your bank to seize money from your bank accounts and ask them to pay you. With wage garnishment, a portion of your wages is withheld until the loan is paid in full. The only way to stop wages or unfreeze your bank account is to pay off the debt or file a consumer proposal or file for bankruptcy.
Many companies will continue billing for several months using their internal billing department. However, after a few months they will write off your account as uncollectible and hire a collection agency to make the payment. A collection agency may receive a commission or purchase debt for pennies on the dollar.
Before a debt collector contacts you, they must send a private letter by mail or email stating how much you owe, who the original creditor is, and the name and contact information of the collection agency seeking payment and the debt collector.
Debt collectors often use aggressive tactics to get you to pay, such as calling repeatedly, contacting relatives, and calling at inconvenient times.
How To Pay Your Credit Card Bill
If you’ve been getting a lot of calls about credit card debt you can’t pay and want to consider some debt settlement options, contact us.
It is important to know your rights and understand what a collection agency can and cannot do. For example:
Always make sure you are talking to a legitimate collection agency, which is why you should request written documentation before providing any personal financial information, negotiating any terms, or making any payments.
When your account is sent for collection, this information is reported to the credit bureaus. Accounts marked as ‘in collection’ have a very negative impact on your credit score and this notice will remain for 6 years.
What Happens If I Just Never Pay My Credit Card Bill?’
The statute of limitations for loans in Canada varies by province from 2 years to a maximum of 6 years. For example, in Ontario this means you can’t be sued for unpaid unsecured debt for 2 years after the date of last activity, which is usually the date of your last payment or the last date you charged your card.
It is important to understand that debt collectors may continue to call to collect old debts, even debts that have been removed from your credit report. Although they can no longer sue you in a Canadian court, they can continue to collect money because the debt never goes away until it’s paid or you file.
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