I was unemployed for 6 months 2 years ago. During that time i begged, borrowed and stole in order to keep my bills current. I also used credit cards to supplement my unemployment so i could keep paying my bills and keeping everything current. This created a debt to income ratio that is skewed. Even when I got a new job, my monthly debt payments were more than my income so every month I would bleed money. Now, my savings are gone. I have borrowed money to keep my payments current, but this is an unending battle. I want to know what will happen if i stop paying my credit card bils. I know it will destroy my credit, but frankly, with my debt to income ration being so high, my credit isnt all that good anyway. I cannot get any sort of consolidatin loan cause im too much of a credit risk at this point. I've heard that if you dont pay your credit cards eventually they will offer to settle for almost a 1/3 of the amount you now owe, and sometimes you can negotiate it so that they take the black mark off of your credit report. Is any of that true? I dont want to NOT pay my debt. But i am simply out of money and cannot do it anymore. i've called the credit card companies and they basically say "it sucks to be you" - im paraphrasing...but really, they were no help...they said i could consolidate, but my debt was too high....i said ive been paying for years without missing a payment...consolidation would lower my payments and make it easier to pay my bills, therefore ensuring that i dont miss a payment....but they would not help me....i am out of options.... i just want to know what the credit card companies can do? what sort of legal action can they take? please help|||Your credit will be ruined.
This is what is going to happen if you quit paying your credit cards,
1. After 180 days of delinquency, and by law, the bank has to charge your account to their Profit%26amp;Loss account. After that, they can no longer attempt to collect from you.
2. What they can do is sell your delinquent debt to a third party collection agency known as a junk debt buyer.
3. Junk debt buyers have the same rights to collect from you as your original creditor did. They can report you to the credit bureaus. They can call you, they can dun you, and they can take you to court and sue you for the entire amount of the debt.
The sad thing is that the credit card company is not going to help you as long as you keep your payments current. Once the debt is sold, and your credit is down the toilet, you have a better chance of negotiating for a lower settlement. Junk debt buyers buy delinquent debt at great discounts, sometimes for pennies on the dollar. They are sometimes willing to settle for as little as 25% (or maybe less). The older the debt is, the more likely they are to reduce the settlement. That is, if they don't take you to court to get a judgment against first. Once they file suite, they will not settle for less.
Many people who have to default on credit card debt manage to stay under the radar until the statute of limitations expires (check your state's statute of limitation on credit card debt (open accounts)).
Sorry, I couldn't be of more help.
Good luck|||After 5-6 months of non-payment, your accounts will get charged-off. A charge off is devastating to your credit rating and it will remain on your credit report for 7 years, even if you later pay the default back in full. After the account defaults, one of two things will happen: They will sell it to a collection agency, which will try to annoy/harass you into paying...or they will serve you a summons and take you to court to try to win a judgment against you. It's impossible to predict what any one creditor will do. You might luck out and all creditors will charge-off of the debts without taking legal action...
If they take you to court and win a judgment, the following can happen:
- Garnishment of your wages...After roughly the first $800 in wages per month, they can garnish from 10 - 25%, depending on what state you live in. (Wages cannot be garnished for credit card debt in these states: PA, TX, NC, SC - freezing of your checking accounts. - If the default is really large and you own a home, then they may try to place a lien on it, which is only good if you voluntarily sell your home. They can't force you to sell against your will.
========
If you're overwhelmed with credit card debt and you've exhausted all self help options like slashing expenses to the bone, selling valuables and getting extra work, then there are really only 2 options: Entering a debt management plan through a non profit credit counseling firm like NFCC or filing for Chapter 7. NFCC can negotiate reduced payments and interest but NOT settlements. Referral at: http://www.nfcc.org - If this does not work out, the other option is Chapter 7 bankruptcy.
Stay away from any debt consolidation firm that promises to cut your debt and payments in half. These firms work by having you deliberately default on your credit cards to settle for half. This is a risky process and your creditors might respond by taking you to court to get a judgment.|||They sue you for the money and your credit is destroyed for 5-7 years.
"I've heard that if you dont pay your credit cards eventually they will offer to settle for almost a 1/3 of the amount you now owe, and sometimes you can negotiate it so that they take the black mark off of your credit report" - highly unlikely. They will seel the debt to a collections comany who will hound you for years.|||Yes it will ruin your credit. Many are suffering your plight and are finding ways to stay barely floating. All the companies can do is add the defaulted debts to the ones who are not willing to throw their hands up and quit. That adds to the problem of people who obtained credit that never intended to pay it in the first place. Beg borrow and steal is good but now we start to sell. My family has gotten rid of stuff we don't really need, things sentimental , eaten beans and cornbread for weeks and I've written bum checks to pay for doughnuts to sell in order to just get to the next bill cycle. NEVER give up. It may seem like you can't go another step but you are already defeated if you quit now. We'll make it past this. But not if we give up.|||Charge-off
As with most consumer debts, failing to make payments on your credit card accounts in a timely manner will likely result in the lenders reporting late payments to the major U.S. consumer credit reporting agencies — Experian, Equifax, and TransUnion. After receiving no payment for 6-8 months, the creditors will be required to “charge off” the debts, meaning that they must remove the debt from their “accounts receivable” books; a charge-off does not mean that you are not liable for the debt, only that the creditor. Charge-offs will appear as derogatory items on your credit reports, and will likely cause a significant reduction in your credit score. To read more about credit, credit scoring, and credit reports, I encourage you to visit the Bills.com at Credit Information %26amp; Resources page.
Collections
While the credit problems associated with financial hardship are an issue for consumers who are planning to make a large purchase in the near future, the more immediate consequence experienced by most consumers are the collection activities undertaken by many creditors. First, you will likely receive collection calls and letters from the creditor directly. If you are still unable to pay the debt after several months, the creditor is likely to refer the account to a third-party collection agency. Third-party collectors are known to be much more aggressive in their collection tactics than original creditors, so do not be surprised if the calls become more persistent, or even threatening. Thankfully, federal law, the Fair Debt Collections Practices Act, requires third-party debt collectors to stop calling you if you send a written demand to cease communication. You can find an example cease communication demand letter at the Bills.com Debt Do-it-yourself page.
Judgments
In some cases, when all other collection efforts fail, a creditor will decide to file a lawsuit against a consumer for his or her unpaid credit card account. In my experience, only a small percentage of delinquent accounts end up in litigation, but it is a possibility about which you should be aware. If one of your creditors sues you, the court will likely issue a judgment in the creditor’s favor. Depending on your state’s laws regarding the enforcement of judgments, the creditor may be able to garnish your wages, levy your bank accounts, or take other action to enforce its judgment. Most consumer debts do not result in litigation, so you should not be overly concerned, but if a creditor does file a lawsuit against you, you may need to consider establishing a repayment plan, or even filing for bankruptcy protection, to prevent further enforcement action.
Credit Score Impact
In terms of your credit score, it would probably be better to have a single large account which you are unable to repay rather than having multiple delinquent accounts. Although the large account would be more heavily weighted, a single delinquent account is preferable to numerous small delinquencies. As for debt consolidation, debt management, or debt settlement, generally the opposite would be true — the more accounts you have, the more flexibility the debt servicing company would have in negotiating with your creditors. If you have only one account, if the creditor is unwilling to negotiate, the whole plan is bust; however, if you have multiple creditors, one or two creditors’ refusal to cooperate will not defeat the plan as a whole.
I wish you the best of luck in resolving the financial problems you are facing.
I hope this information helps you Find. Learn %26amp; Save.
Best,
Bill
Bills.com
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