What happens if you stop paying your credit card bill?

| Apr 30, 2021 | Bankruptcy |

Most Mobile area residents have at least one credit card. In fact, the average American has four credit cards. Making monthly payments on these credit cards can be challenging for some people, especially if they have lost their job or have many other unexpected expenses. If this happens a person may wonder what happens if they don’t pay their credit card bill.

The first month

If a person misses a credit card payment the credit card company will add a late fee. A person’s credit score may also drop by some points because of the late payment.

Two to three months

If a person is more than 30 days late with their payment, they will be reported to the credit bureaus. The missed payments can be reflected on a person’s credit report for up to 7 years. The cared issuer will also typically block their customer from making any new purchases. There will be a late fee assessed for each month a payment is missed and the interest rate may be increased. This is also the time when credit card companies will start making annoying phone calls.

Four months and more

By this time a credit card company will charge off the balance owed. This means that the debt is sent to a collections agency. Having an account sent to collections can ruin a person’s credit score. They will also receive frequent phone calls from the collections company and will have to pay taxes on the debt.

A legal professional who is skilled in bankruptcy can help their client with their financial problems. They can assess their financial situation and advise them as to what their best options may be. Bankruptcy may be a good way for a person to make a fresh financial start.