Wondering what happens if you don’t pay your credit card debt? Not paying off your credit card debt can lead to more than just a frozen credit line. Many credit cardholders aren’t aware of the serious consequences that can happen when your monthly credit card payment goes unpaid.
What Happens When You Miss A Credit Card Payment?
Life happens, if you miss a payment on two on your credit card because of extenuating circumstances like illness or other unexpected family emergencies, your credit card provider is likely to understand as long as you make a payment or a payment arrangement to keep your balance in good standing. At this stage, missing one or two payments can lead to incurring late fees and loss of special privileges given by your credit card company.
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Card Privileges Revoked
If things continue and you miss more credit card payments, the consequences and penalties can get serious. When you miss three or more payments, your creditor can revoke your card privileges and close your account. This leaves you with an unpaid balance and no use of your credit card to help pay expenses. Not only can your credit card company close your credit card account because of mounting credit card debt, they can also negatively report you to the top three credit bureaus.
Late Fees/Credit Score Diminishment
A few missed payments can cause accumulating late fees, loss of use of your credit card, and negative reporting to the credit bureaus. Multiple negative reports to credit bureaus can reduce the likelihood of you getting approved for more credit cards and other unsecured loans in the future. If your credit card balance remains unpaid, at this point, things can quickly escalate and go from bad to worse.
What Happens If I Miss Multiple Credit Card Payments?
If your credit card debt goes unpaid without an arrangement or an acceptable payment agreement made between you and your creditor, they can legally sell your credit card debt to an outside collection agency. This means the outside agency now “owns” your credit card debt, and it is their sole responsibility to collect on that debt. Collection agencies are known for making repeated and unwanted calls to remind debtors about their ever-growing debt.
When collection agencies can’t get a payment or an agreement set up with credit card debt holders, things can get even more sticky if they or your original creditor decide to file a lawsuit against you and any other account holders for the unpaid charges. Not only is going to court for unpaid credit card debt embarrassing, it can also lead to the ultimate consequence of wage garnishment if the judge rules in your creditors’ favor.
Wage garnishment happens when a judge places a lien on your income. The judge and your creditors designate an amount that they deem fair, and they deduct that amount from your earnings before you receive your paycheck.
Seek Professional Help
Now that you know what happens if you don’t pay your credit card debt, avoid the negative consequences of not paying off your debt by being proactive. Add up the total amount of credit card debt you owe and figure out how much you can pay towards the balance each month. If the amount you need to pay is more than you can afford, it’s time to contact an expert to learn more about debt relief programs.
Debt relief programs can help you merge all your credit card payments into one monthly payment you can afford. Specialists contact credit card companies and other debtors on your behalf to negotiate a reasonable monthly payment amount to help you get out of debt faster.