Almost every Indianapolis area resident has at least one credit card. In fact, it is estimated that most people have at least 4 credit cards. Although these credit cards are usually paid off each month, there are situations where you may not be able to make the payment. You may wonder what happens when this occurs.
Unexpected medical bills, being laid off from your job, an injury, car repairs, etc. can make paying your credit card bills difficult. Due to no fault of your own you’re now facing debt that you can’t pay. Depending on how long you go before making a credit card payment, the consequences can be serious.
The first month
When you miss a credit card payment the credit card company will impose a late fee. Your credit score may also drop a few points because you didn’t pay on time.
Two to three months
If your payment is more than 30 days late your account will be reported to the credit bureaus and can remain on your report for years. The credit card company will block you from any new purchases and they will impose a late fee for each month a payment is missed. The interest rate will also rise and you will start getting phone calls from the credit card company.
After 4 months
By this time your account will be charged off by your credit card company. This means that the balance will be sent to a collection agency who will now be the ones you will have to deal with. An account in collections can remain on your credit report for up to 7 years and make it almost impossible to open new accounts, securing loans, and applying for rentals.
A legal professional who is skilled in bankruptcy can help their client understand their options when they are facing credit card bills, they can’t pay. Bankruptcy may be a good option for them to have a fresh financial start.