When you realize that your credit card debt has grown into a huge amount, your initial reaction will be shock, disbelief and then denial. Most people get over these three reactions immediately and start to take action for their credit responsibility. However, there is also the percentage of debtors who refuse to accept their debt and choose to ignore the debt that they currently owe.
While not thinking about your debt will keep the stress away, you will never be at peace. It may allow you to continue living the life that you got used to but that will only be temporary. Your credit card debt is the type that can quickly spiral out of control. To convince you that ignoring your card debt is a bad idea, here is a rundown of what will happen the longer you run away from this credit obligation.
Whenever you miss one payment, your creditor will immediately take notice of this. It will be considered a missed payment if you send less than the minimum payment requirement or send nothing at all. Even if you are late for only a day, you will immediately be given a $25-$35 worth of late fees. The exact amount will depend on your credit card company. This fee will be added on top of your balance. On top of that, your current balance will be used to calculate for the interest amount that will be added to your minimum monthly payment. This is done by getting your balance and multiplying it based on the current APR (Annual Percentage Rate). The product will be the interest rate that will be placed on your monthly minimum payment. As you ignore your balance, it will grow and thus making the interest amount grow as well.
Usually, it takes the creditor 30 days before they report that you have not been making your payments. If two billing statements passed without any payments from you, then you can expect that your credit report already reflects this behavior and your score will decrease because of that. This decrease can be more than 100 points - depending on your current score and the time that lapsed since your last payment. Some creditors wait until after 90 days before reporting that you have been defaulting on your payments.
When you have been late for 30-60 days, you can also expect that the people who will call you will be coming from the collections department already. The good news is, this is still within the company so the callers will still treat you as a client and will not be disrespectful. They will still try to salvage their relationship with you in hopes that you will still do business with them in the future. However, this also means that the creditor already marked you as a bad account. At this point, ignoring the debt will be very hard to do.
After 180 days of not paying your credit card debt, you can expect that your account is already charged off. This means the creditor gave up on getting any profit from you and will apply for a tax exemption to cover their loss. But this does not mean your debt is forgiven. In fact, it signals that the calls will get uglier because collection will be turned over to a third party company who wouldn’t care for you as a client.
A charged off debt also brings a negative mark on your credit score so you can expect that it will go even lower.
Bottom line is, ignoring your debt will not make it go away. The sooner you act on your debt problem, the easier it will be. There are many debt relief options that you can choose from. In fact, if your concern is your credit score, debt consolidation is the option that has the least effect on your report. Know your options and start getting yourself out of debt now.
While not thinking about your debt will keep the stress away, you will never be at peace. It may allow you to continue living the life that you got used to but that will only be temporary. Your credit card debt is the type that can quickly spiral out of control. To convince you that ignoring your card debt is a bad idea, here is a rundown of what will happen the longer you run away from this credit obligation.
Whenever you miss one payment, your creditor will immediately take notice of this. It will be considered a missed payment if you send less than the minimum payment requirement or send nothing at all. Even if you are late for only a day, you will immediately be given a $25-$35 worth of late fees. The exact amount will depend on your credit card company. This fee will be added on top of your balance. On top of that, your current balance will be used to calculate for the interest amount that will be added to your minimum monthly payment. This is done by getting your balance and multiplying it based on the current APR (Annual Percentage Rate). The product will be the interest rate that will be placed on your monthly minimum payment. As you ignore your balance, it will grow and thus making the interest amount grow as well.
Usually, it takes the creditor 30 days before they report that you have not been making your payments. If two billing statements passed without any payments from you, then you can expect that your credit report already reflects this behavior and your score will decrease because of that. This decrease can be more than 100 points - depending on your current score and the time that lapsed since your last payment. Some creditors wait until after 90 days before reporting that you have been defaulting on your payments.
When you have been late for 30-60 days, you can also expect that the people who will call you will be coming from the collections department already. The good news is, this is still within the company so the callers will still treat you as a client and will not be disrespectful. They will still try to salvage their relationship with you in hopes that you will still do business with them in the future. However, this also means that the creditor already marked you as a bad account. At this point, ignoring the debt will be very hard to do.
After 180 days of not paying your credit card debt, you can expect that your account is already charged off. This means the creditor gave up on getting any profit from you and will apply for a tax exemption to cover their loss. But this does not mean your debt is forgiven. In fact, it signals that the calls will get uglier because collection will be turned over to a third party company who wouldn’t care for you as a client.
A charged off debt also brings a negative mark on your credit score so you can expect that it will go even lower.
Bottom line is, ignoring your debt will not make it go away. The sooner you act on your debt problem, the easier it will be. There are many debt relief options that you can choose from. In fact, if your concern is your credit score, debt consolidation is the option that has the least effect on your report. Know your options and start getting yourself out of debt now.
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