Finance

What Happens If I Can’t Pay My Credit Card Debt?

If you fail to pay your credit card bill then, you will harm your credit score due to the same. If you continue to miss the payments, your credit card can be frozen, and your debt could be sold to a collection agency and the collector of your debt could sue you and also have your wages garnished. Let us discuss the worst scenarios that could happen in the case of credit cards and look for the solutions to it i.e. how can one avoid credit card debt and if one happens to fall into the same category or thing how can one get out of it without creating a problem. 

What are the scenarios that could happen?

  1. One missed payment of the credit card.
  2. Three missed payments of the credit card.
  3. More than three missed payments of the credit card.
  4. Never paying the credit card debt. 
  5. One missed payment

On missing your first payment

your credit card issuers could revoke your introductory APR. For instance, if you have a credit card that has zero APR, missing one payment could result in rising in your APR. After two missed payments your credit card issuer will charge you a penalty APR typically ranging between 27.99% and 29.99%. 

Also, if you are being charged an increased penalty APR, the CARD act requires the issuer to have a look at your account every six months to determine if you are eligible for a lower interest rate or not. 

Three missed payments

If you happen to miss three consecutive payments on your credit card, then you might have to pay a lot of late fees and it could be $100, and not only this, you will also be required to pay the interest rates that have accumulated on your balance over time. Three missed payments will also impact your credit score negatively. This impact will show up on your credit card for seven years. 

More than three missed payments of the credit card

If you happen to miss the payment of the credit card for more than three months, this will not only add up to your late fee, but also you will have to pay the interest rates, and also you will have increased APR. This can result in your credit card issuer charging off your account. Which therefore means that your credit card issuer does not believe that you will be able to pay off your debt in full. 

Never paying the credit card debt

If you never pay your credit card debt then your debt collectors will use any legal means to collect the debt from you. This even includes taking you to the court and pushing you to pay the debt amount. Your card issuer can take legal action against you to collect the outstanding debt. If a judgment has been filed against you, it is better to answer the summons and explore the best options that you have. If you happen to not respond to the judgments, you are almost guaranteed to lose the case. This will result in forced debt repayments. 

These are the things that could happen if you happen to kiss the credit card payments. Well, there are several FAQs asked by people if they happen to fail in making the payment for the credit card.

Let us have a look at most asked FAQs by the people

How can I get help with credit card debt?

If you are facing issues to make your current payment of the credit cards, due to many reasons or due to the pandemic i.e. coronavirus, then there are several ways by which the creditors can help you to fix your issues and problems. To support and help the customers who are struggling with their finances, creditors might be able to help by-

  • Offering credit card payment holidays for up to three months.
  • By ensuring that your credit rating won’t be affected if you happen to make use of the payment holiday.
  • By increasing credit card limits- you need to understand that this could have a long-term impact on your credit file. So make sure and be aware that you are on a debt solution, taking out extra credit could go against the terms of your agreement. 

How can I pay off my credit card debt?

  • Start by understanding your finances, make sure and look for the ways by which you can pay each month. Work out on your budget, by listing all your expenditures and turn this out into a monthly plan that you can follow and make use of. 
  • Make use of this budget, to keep aside an amount to repay your credit cards.
  • Another option is that you can make use of car title loans to pay off your credit card debt easily. 

Can I go to jail for credit card debt?

This is something a lot of people worry about. Well, the risk of a prison sentence is very rare for unpaid debts. This only happens with a certain kind of debt including criminal fines and government debts. Credit card debt, along with several other kinds of credit is not enforced by the threat of imprisonment. 

Can I negotiate credit card debt?

If you happen to fall behind in your payments it is a good idea to contact your credit card provider to explain the reason for the same and convey to them how much you can pay them each month. Several creditors will agree to an affordable repayment plan or a payment holiday to help you get back on track even if it is for a few months. Some creditors will accept a full and final settlement to pay off the debt that is less than the total amount owed. 

How does a credit card affect my credit score?

Your credit card provider will share the information with the credit reference agencies about the way you make use of your card to update your credit score. The information will let the other lenders know how good you are at managing your finances and how risky it is to lend you money. 

These are the most asked FAQs by the people on credit cards. Well, if you happen to face any issue in paying back the amount of the credit card then you can rely on car title loans and get rid of your financial issues instantly. If you are certain about getting the small loans, then you might consider getting it from Canada Car Cash

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