Most Indianapolis area residents have at least one credit card. In fact, the average American has four credit cards. Although we try and pay off these credit cards each month, there can be situations that arise that make that more difficult. So, what happens if you are unable to pay your credit card bill.
The first month
When you miss one credit card payment the credit card company will add on a late fee. Your FICO score may also be affected.
Month two to three
When you miss more than one credit card payment, the credit card company will add on a late fee for each month missed. Your account will also be reported to the credit card bureaus. The missed payments can be on your credit report for up to seven years. The card issuer will also block you from making any new purchases and you will start getting annoying phone calls from the credit card company.
After four months
When you haven’t paid your credit card for several months, the credit card company will charge off the balance. That means the balance is sent to a collections agency and you will have to deal with them from now on. This can severely affect your credit score and it can stay on your report for seven years. You will also have to pay taxes on the debt.
There are many circumstances that can impede your ability to pay your credit card bill. An unexpected illness, a job loss, a car that breaks down, etc. Although you may not intend to stop paying your credit card bill, life happens sometimes. A legal professional who is skilled in bankruptcy can help their client understand what options they have with their debt and if bankruptcy can help them make a fresh start.