Friday, June 17, 2011

Consequences of Missing Multiple Credit Card Payments

 It can happen to anyone.

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.

 Your Credit Score will be down:

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.

Your Loan Goes to Collections:

If you do not respond to the lender's notices for payment, they will turn your loan over to collections.
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.
You Default on the Loan:

Each credit card contract lays out explicit terms of default. Simply being late on a payment is not cause for default. However, your contract may state being late on multiple payments is grounds for a notice of default. You will receive this notice in written form, and you will likely also receive a call from a collector.
Once you have received notice of default, it is time to make fast and serious efforts to resolve the issue. Typically, the credit card company will give you a small window to resolve the issue before the card is closed and the default hits your credit score. Once this happens, the company can take legal action against you.

Your Assets will be Seized:

If you have placed collateral in order to secure the loan, your collateral will be seized if you default. This is the worst-case scenario in any loan contract. However, it is a definite possibility if you have defaulted on your loan. You cannot avoid the seizure of assets by fleeing; if you do so, you will likely be caught down the line. Instead, it is best to deal with the issue head on by settling the debt with the lender.
You may try to make a cash settlement to avoid submitting your asset. A credit counseling agency may be able to help provide you with tools to settle your debt.


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