Since credit card debt is unsecured debt, you may be tempted to simply walk away from your accounts if you are having a difficult time paying your bills. But walking away can cause many problems, because the creditors usually won't go away, even if they stop bothering you for a while. Eventually, the unsecured debt may result in creditors placing liens against your property to collect the debt.
Phone Calls
Get behind on your credit card bills, and the phone will start ringing several times per day. The Fair Credit Debt Collection Act prohibits certain types of calls, or abusive behavior by collectors, but legitimate attempts to collect debt are allowed. Many credit card companies use phone dialers that will call you automatically and transfer you to a human when you answer the call. If you don't answer phone calls from the credit card company, they may sell the account to another collector who will continue to call you several times per day.
Rising Costs
If you default, or get behind on a credit card, you can expect your interest rates on the card to skyrocket. The rates could go as high as 25 to 30 percent, with some accounts charging even more. The credit card company will add on late payment fees, which can be substantial over time. In addition, if the increased interest rates and late payment fees cause your account to go over its limit, you will get another fee tacked on for this as well.
Lawsuits
If you continue to default on your credit card bills, the credit card company may sell your debt for pennies on the dollar to a junk debt buyer. The debt buyer has little to lose by taking you to court. You will be served paperwork from the court by the sheriff's office, and you will need to appear and defend the lawsuit or you will lose the case by default. If the debt is legitimate, you will probably lose the lawsuit anyway, and the judge will award the creditor a judgment for the outstanding debt and any damages that the creditor has suffered.
Garnishments
If you have a judgment issued against you and you live in a state that allows garnishment, the creditor may go back to court to ask the judge to enforce the judgment. The judge may issue an order allowing the creditor to garnish your wages. Depending on the state, the creditor may be able to have your employer withhold up to 25 percent of your salary to pay the creditor. A creditor may also garnish your bank accounts or other assets as well. This can leave you extremely cash-strapped.
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