With so many American consumers struggling to pay their credit card bills a question that we often come across is, what exactly does happen when credit card payments are missed?
Well, as you can imagine there are no ticker-tape parades or anything like that, and while the credit card company can’t have an individual that owes them tossed out of their house, there most certainly are consequences.
Basically what it does is it triggers the bill collection process… and nobody wants to go through that. Let’s break it down to see exactly what happens when credit card holders stop paying their bills.
The first thing that will happen is that the individual will start to receive overdue notices in the mail from the credit card company. If after a while those letters are ignored and payments are still not made the phone calls will begin.
The phone calls will vary between pleasant and helpful sounding to absolutely rude, crude and vulgar. The callers are the bill collection agencies and while there are rules that govern how they conduct themselves they do not always adhere to them.
They get paid by how much money they can get from people that have stopped paying their bills so they do just about anything in their power to extract payment including, in some cases, lies and intimidation.
The bill collectors will call repeatedly and not just at the individual’s home but they will call their place of employment and relatives homes as well in an attempt to embarrass them.
While this is happening the credit card issuer will be making their report to the three credit bureaus which will severely impact the credit record of the person that has stopped making payments.
The interest rates charged will be raised to the maximum amount allowed by law and late fees will be incurred. What most people do not know is that interest can also be charged on late fees too. And when a person goes over the limit on their credit card, penalty fees will be incurred for that as well.
While their are no more debtors prisons per se, legal action can be taken against the person who owes the money. While they can’t be tossed into jail, or have their home taken away, the debtor can have their wages garnished and liens placed on their property.
In short, it’s a lousy way to live and should be avoided at all costs.