What Happens If You Stop Paying Your Credit Card Bills?
Some people make assumption that if they just don’t pay their credit card bills, they’ll magically go away. While this might be the case in some alternate reality, that’s not how things work in our world.
Here’s what happens if you stop paying your credit card bills.
The Amount You Owe Doesn’t Got Away. It Keeps Growing
First, you’re going to keep racking up interest on your balance. Credit cards come with some of the highest interest rates of any kind of debt — typically in the mid-teens or even higher. Allowing that interest to accumulate without paying down the balance will lead to what you owe ballooning up.
But interest isn’t the only way you’re going to owe more money when you don’t pay your credit card bill. There are also late fees associated with missing payments. These will just add more fuel to the fire, as they make it harder to meet even the minimum payment for your bill statement.
You’ll Start Hearing from Collections
You might be thinking: so what if my balance keeps increasing? I’ll just continue not paying it.
That plan isn’t going to work for very long.
Your debt will likely be sold to a collection agency. While your credit card company typically wants to maintain a good relationship with you and other clients, all that goes out the window when your debt goes to collections.
A collection agency is going to pursue your debt by whatever means are within its legal power. And sometimes they’ll even try to do things that aren’t legally sanctioned. It’s important to know your rights when dealing with debt collectors.
You also don’t want to get too friendly with a debt collector. They’re practiced at getting people to offer up information that will ultimately be detrimental to them.
Your Credit Will Take a Hit
There are further reach effects than just the psychological and emotional repercussions of dealing with collection calls. Every time you miss a bill payment, it’ll be noted on your credit report.
While missing a payment once or twice isn’t going to tank your score, repeatedly not paying your bills is a different story. Lenders take your credit score very seriously. If they see that you’ve not been paying your bills, it’s unlikely that they’ll approve you for more credit.
At some point, you’ll run out of people willing to lend you money, even at sub-prime interest rate.
What Are Your Other Options?
People who are unable to pay their credit card bills need to find an alternative to non-payment in order to save their financial well-being. Debt relief is an option that can be extremely helpful to many consumers.
Freedom Financial Network is one of the most trusted names in the debt relief world. It’s important you choose an organization that really has your best interests at heart. There are certainly agencies out there that take advantage of people in a desperate financial situation.
Every year, hundreds of thousands of people file for bankruptcy in order to have their debts forgiven. But this will still take a huge chunk out of your credit score and stay on your report for seven to ten years. It’s a better idea to see if working with a debt relief company first can help you avoid the bankruptcy process.
It might seem like avoiding your debt is the only way to escape it. But not addressing the issue won’t make it go away. One way or another, not paying your bills will have consequences. Consider how you can work to beat your debt and get your finances back on track.