Thursday, December 27, 2012

What Does it Mean to Default on Credit Card Debt?

You can default on your credit card debt if you don't comply with the contractual arrangement outlined in the terms and agreements. Some credit card companies will consider you to be in default at one stage of delinquency while other creditors will consider you to be in default a different stage. If you are past due on a loan or credit card, you should contact your creditors to avoid further action.

Definition

    You are in default on a credit card when you fall past due. Whenever a debtor refuses to pay or cannot pay according to the terms and agreements of the contract they are in default.

Consequences of Default

    The terms and agreements can state the consequences of defaulting on your credit cards. A creditor can increase your interest rate, which will increase your payment and cause you to pay more in finance charges.

Resetting the Default

    If you get your account up to date and fall past due once again you have defaulted again. You can receive late charges if you are in default by one day.

Time Frame

    You can have different levels of delinquency. An account can be 30, 60, 90 or even 120 days past due. Once your account is in serious default (90 or 120 days late), a credit card company can send your account to a collection agency and report the account to a credit bureau.

Considerations

    Credit card companies will eventually have to make some decisions about how they will collect on your account when you are in default.

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