Wednesday, January 30, 2013


If debt overwhelms you, it can be tempting to just stop paying your credit cards. In general, this is not the best idea. There are many other options, such as negotiating lower payments with the company or talk to a counselor about debt management. When you miss your first payment period, a specific chain of events is triggered. A calendar varies widely from company to company, but their actions are the same.
Up to 60 days late

Once your credit card bill is a day late, the credit card company charges late fees added to it.When this is the delay of 30 days, they will report to the credit bureaus as being late on a payment. At 60 days late, the credit card company will trigger your interest rate on the card to their maximum potential as high as 30 percent. All fees and interest will be added to your balance as they accumulate, including late fees added each month.
Delay of 61 to 120 days

After 60 days, most credit card companies look at your map to be in default, and they can send you a letter requesting payment in full. If you have not made any movement towards the payment of your credit card by 120 days (in most cases), the credit card companies consider your account as a charge-off. This means that they ranked your account irrecoverable by normal means and expect to take a financial loss on it. Off charge accounts can do serious damage to your credit report.

Once your account is charged off, you will begin receiving letters and calls from collections. In some cases, the credit card companies start internal collections, and you may be able to negotiate a payment schedule. In most cases, an outside collections buying groups charged-off accounts and tries to collect in full.
Legal limits in Collections

Collectors are legally limited in what they can do to collect the debt. They can not send you to prison, nor can they threaten to send you to prison. They can call you at work or at home, as well as sending letters. They are also legally allowed to call friends, relatives and neighbors to determine how to reach you. If you tell them to call for cease and desist in writing, they can only contact you by mail. You can also specify a single address at which they can communicate with you in order to eliminate the mail at work. Beyond sending letters to a specified address, the debt collectors can do something else: sue.
Lawsuits and garnishment

Debt collectors try to recover small amounts are unlikely to bring a prosecution because prosecution is expensive in time and money. However, they will go to the Court on the biggest debts. If the collector can prove that you have not paid your debt their legal, the Court will make an order for you to pay the debt within a certain time. Usually, the Court will also order garnishment. This order goes to your employer and require the employer, under penalty of law, up to 35% of your after-tax wages to pay off your debt. If you deliberately ignore or avoid the court order anyway, you will find contempt. In this case, you can go to jail as a result of non-payment of debt, however, where a debtor went to prison are very rare.

At this stage, your recourse is limited. You can legally bankrupt credit card debt. Once your bankruptcy is filed, the garnishment must stop. You can call the collection agency to organize the refund does not involve your salary, in most cases, they require an automatic arrangement to pay directly from your bank. Or you can simply pay the debt.