Defaulting On Your Credit Card

March 26th, 2009

moneyproblemsDefaulting on a credit card is one of the worst things you can do.  However, it’s also a harsh reality now.  Many people are losing their jobs and are unable to keep up with their debt payments.   Sometimes, there really is no choice.  When times are at their hardest and there’s no other option left, you’ll have to make the decision to stop paying your credit card.

A Hard Choice

Choosing to default on your credit card is a difficult decision.  Doing so, for one, is a guaranteed way to trash your credit record.  Even worse, you’ll end up on one end of collection activities that can become a frustrating and overall unsavory experience.

What To Expect

When you default on your credit card, you can expect the following events to be set in motion.

1. Your account will be turned over to collections

You’ll start receiving Final Notice letters and, later, calls at any phone numbers they can get their hands on, including your home, work, cell phone and emergency contacts.   If you refuse to respond or make any payments, collections will begin getting more aggressive.  If they can’t get in touch with you (because you’re hiding), they’ll pass you over to skip trace, who will track you down by literally calling everyone they can associate with you.

2.   Your debt will be put on the market

If the issuer can’t get you to pay (over several months to a year), the bank will cut its losses and auction off your debt to a professional collections company.  Instead of dealing with the bank, you will now be went after by a company whose sole job is to run after unpaid debt.  That means they’ll be more insidious, often resorting to threats and borderline illegal tactics to try and get you to settle.

3.  The collections company will file a judgment

If you still don’t pay, the collections company will likely seek judgment from a civil court.  You will have to appear before a judge and come to a settlement with the debt collector.  If you have a good lawyer, this can prove a good opportunity to bring your overall debt to a much lower amount than your actual balance.  If you don’t come to terms with the collections company, there is a likelihood that your wages will be garnished.

noel Posted in Credit Card Guides

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