Whether you have already missed a few payments or looking at too much month at the end of your next paycheck going forward, there are some things you need to understand about the credit card default process. Credit card default is a civil and not a criminal issue. You will not be doing jail time for neglecting credit card payments regardless how long or how much. However, there are consequences for not paying your credit cards bill on time and consistently. Your relationship with your credit card company is the backbone to your credit score or FICO rating. Even though you may not be considering a loan, your credit score is visible to employers and many insurance companies use this rating to assess risk and other decisions outside of loaning you money.
The credit card companies really do want to work with you. The facts are that the credit card company will recover much more “bad debt” working with the customer rather than transferring your account to a debt collection agency or law firm. Although you may feel the constant calls and messages at all hours of the day are a nuisance, they are aggressively pursuing contact with you to work out a payment plan that is acceptable for both parties.
It is important to understand that if you ignore a credit card company long enough and you have a considerable balance due, they will seek legal action and file a judgment against you. Once a judgment is filed, it can stay on your credit report for 10 years and permit the credit card company to contact your employer for wage garnishment. Although you can not be fired for a wage garnishment, it can be very embarrassing.
In summary, here are the three things you must know about credit card defaults and late payments.
1. It is a civil matter and not criminal
2. Credit Card companies will exhaust all possibilities working with you before engaging a collection agency
3. They will sue you if necessary which can lead to wage garnishment
If you find yourself overwhelmed with debt repayment, consumer debt settlement is a great alternative to bankruptcy or ignoring the debt. Consumer debt settlement is when you negotiate with your creditor an amount less than you owe. It will negatively affect your credit score but much less of an impact than bankruptcy.