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What happens if I don’t pay my credit card bill?

Most Long Island area residents have at least one credit card. In fact, it is estimated that Americans have at least four credit cards. Most of the time a credit card holder is responsible with credit card debt but occasionally an unexpected life event happens, and a person finds himself with way more credit card debt than they can handle. So, what happens if a person doesn’t pay their credit card bill?

The first missed payment

After missing one credit card payment, a credit card owner will receive a late fee which is capped at $27 for the first offense. A credit card interest rate may also go up. Missing a payment can also affect a person’s credit score.

2 to 3 months of missed payments

If a payment is more than 30 days late it will then be reported to the credit bureaus which will affect a person’s credit score. The missed payments can remain on a person’s account for up to 7 years. A credit card issuer will also turn off the card for future purchases. Late fees will also be tacked on for additional missed payments. If a payment is more than 60-days past due, the interest rate may go up to 29.99% for the entire balance. Credit card companies will also begin making frequent phone calls to try and collect payment.

More than 4 months

After missing several months of payments a person’s account will be charged off. This means that a credit card company sold the debt to a collection agency who will now be contacting the credit card owner. When an account is sent to collections it can be detrimental to a credit score. The IRS will also notify a person that they will have to pay taxes on the canceled debt.

If a person is facing a situation in which they are no longer able to pay their credit card debt, they may want to speak with a legal professional who is skilled in bankruptcy. An attorney can help their client with their credit card debt before it gets out of hand and help them make a fresh financial start.

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