Consumers in Virginia and elsewhere tend to reach for their credit cards when it comes to paying for goods. While this can be beneficial when finances are good, as it can help with making large purchases or collecting rewards points, when an individual is going through financial problems, this could create a much worse situation. Continually putting charges on credit cards when one does not have the funds to pay them off does not only cause a growing outstanding balance but could present difficulties when it comes to paying bills on time or at all.
What happens when you fail to make credit card payments?
It should come as no surprise that negative results will occur when a credit card payment is missed. Most times, this means late fees, increased interest rates and damage to one’s credit score. If this is the first time, a credit card hold could work with the credit card company to have these penalties removed by explaining why they were late paying the bill. However, if subsequent missed payments occur, this is very unlikely to happen.
If one reaches three missed payments, he or she will continue to experience late fees, increased damage to their credit score and will have their credit card account closed. When missed payments reach more than three, which means they have gone over three months without paying their credit card bill, the late fees and damage to the credit score will continue. In addition to this, the debt may be sold to a collection agency and a lawsuit could be filed against the cardholder regarding this unpaid debt.
Addressing credit card debt through bankruptcy
If you have maintained a regular income and seek to protect your property while addressing credit card debt, then filing for a Chapter 13 bankruptcy might be your best option. This process requires one to develop a repayment plan, typically lasting 3 to 5 years. While this will help one address this and other debts, it is important to note that a Chapter 13 will appear on one’s credit score for 10 years. Although this is a discerning fact, the reality is that it is possible to rebuild one’s credit as soon as he or she files.
Filing for bankruptcy can be an emotional and confusing time. While one would like to erase overwhelming debt, the impacts filing might have could be significant. Thus, it is important to understand the situation fully and how best to move forward with your financial situation.