Credit card default occurs when you fall significantly behind on your credit card payments. Default is a serious condition for a credit card that affects not only your standing with the credit card issuer but also your overall credit status and your ability to obtain other credit-dependent services.
How Credit Card Default Happens
When you accept a credit card, you agree to certain terms. For example, you agree to make the minimum payment by the due date listed on your credit card statement. If you miss the minimum payment for six consecutive months, you will have a credit card default. The credit card issuer is likely to close your account and report the default to credit bureaus.
In the few months leading up to the default, your late payment status will be reported to the three major credit bureaus, and your credit score will be affected by your missed payments. If you apply for any new credit cards or loans after the default, your application is likely to be denied because creditors believe you are at risk of defaulting on any new credit obligations. In fact, some lenders may not approve you at all until you resolve the default balance (or until it is removed from your credit report).
By the time your credit card default occurs, you may have accumulated hundreds of dollars in fees and interest. Unfortunately, your options for resolving the credit card default may be limited due to the number of missed payments on your account. If you had contacted your credit card issuer earlier, you might have been able to reach an agreement to make payments on the overdue balance and restore your account to good standing. At this stage, your credit card issuer will expect the full amount owed to be paid.
Options Available for Dealing with Credit Card Default
Here are the limited ways you can deal with credit card default:
1. Pay the account in full (if you have the money). First, try negotiating a pay for delete where the credit card issuer removes the account from your credit report in exchange for payment. Some creditors may agree to this while others may not, but you won’t know unless you ask.
2. Settle the account for less than owed. It may be possible to settle the debt. Creditors are not obligated to accept a lesser amount than what is owed, but some may be persuaded.
3. File for bankruptcy. Depending on the severity of the default and any other debts you have, you may consider filing for bankruptcy to restructure your debts and make them more manageable or to discharge them. Note that bankruptcy stays on your credit report for 7 to 10 years, so it’s not a decision made lightly.
4. Do nothing. You can try to ignore the account, but be aware that the creditor can still pursue you for the debt, report it to your credit report, and possibly sue you as long as the statute of limitations is still in effect.
If you are receiving calls from debt collectors, you can stop them by sending a cease and desist letter. Note that this letter applies only to third-party debt collectors, not the original creditor.
Was this page helpful?
Thank you
On your notes! Tell us why?
Sources:
– StepChange Debt Charity. “Default Notices and Defaults After Missing Payments.”
– insideARM. “Debt Collection Cease and Desist Letters: The Unintended Consequences.”
Source: https://www.thebalancemoney.com/what-is-credit-card-default-960209
“`css
}@media screen and (max-width: 480px) {
.lwrp.link-whisper-related-posts{
}
.lwrp .lwrp-title{
}.lwrp .lwrp-description{
}
.lwrp .lwrp-list-multi-container{
flex-direction: column;
}
.lwrp .lwrp-list-multi-container ul.lwrp-list{
margin-top: 0px;
margin-bottom: 0px;
padding-top: 0px;
padding-bottom: 0px;
}
.lwrp .lwrp-list-double,
.lwrp .lwrp-list-triple{
width: 100%;
}
.lwrp .lwrp-list-row-container{
justify-content: initial;
flex-direction: column;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: 100%;
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
“`
Leave a Reply