Almost every Geneva area resident has at least one credit card. In fact, the average American has four credit cards. Credit cards are used for every day purchases as well as any emergency that may crop up such as medical expenses, car repairs, etc. Although most people understand the importance of paying their credit card bill each month, sometimes it is not that easy. A job loss, accident, divorce, or other major life event. There are serious things that can happen if a person does not pay their credit card bill.
When a Geneva area resident is unable to pay their credit card bill there are certain things that happen. The following is the basic process that credit card companies follow when their customer does not pay their credit card bill.
Late fee applied
Even if a person is only one day late, a credit card company will apply a late fee to their account. A credit card company may also increase the amount of interest it charges its customer. A credit score can also decrease because on time payments are one factor of a credit score.
Credit bureau contacted
When a credit card hasn’t been paid in more than 30 days a credit card company will typically contact the credit bureaus. The missed payment will reflect on a person’s credit report for several years. After two months of nonpayment a credit card company will turn off the credit card for any more use. The interest rate may also go up substantially. A person will also start getting phone calls from their credit card companies.
Credit account charged off
After several months of not paying a credit card bill, a person’s bill will be sent to a collection’s agency and charged off. The credit card company will no longer negotiate with their customer and their customer’s credit score can be ruined. Collectors will call repeatedly, and the IRS will be requiring taxes be paid on the debt.
If a person is facing a situation in which they are not able to pay their credit card bills they should understand that there are legal options. Bankruptcy can be one option where a person can get rid of their old debt and start fresh. An attorney who specializes in bankruptcy can help their client understand their legal options and help them get back on their feet.