If you are overwhelmed by credit card debt, you may feel like you will never get your head above water. There are few things worse than financial stress, and at times, you may even feel like you should give up.
The idea of working with your creditor to negotiate credit card debt may be overwhelming and something you would rather not deal with.
But what happens if you just stop paying? Is it better to just walk away than going through the trouble of negotiating credit card debt or attempting to set up a payment plan?
While it is true that credit card debt is unsecured, there are still consequences of just walking away from your debt.
You probably know that when you make a payment more than 30 days late, this is reported to your credit bureau. If you are at the point where you are considering just stopping making payments, this may not matter to you.
But, did you know that your credit history can impact more than just your ability to get a loan? Most employers will pull your credit report prior to making a job offer. Many also will re-pull your credit if you are up for a promotion. The reason for this is that how you handle your bills can be a sign of your character and also an indication of how much stress you are under. Both of these factors can play into your job performance.
Walking away from debt can also make getting insurance a challenge. Did you know that all insurance companies will look at your credit history prior to issuing you a policy? Some times of insurance, like life insurance, may become especially difficult to aquire.
Beyond these issues, just falling behind on your payments can be VERY expensive. Most credit cards have a penalty interest rate of close to 30%. And, under universal default laws, all of your creditors can raise your interest rate even if you are behind on just one account.
And, let’s not forget about the harassing phone calls from creditors. They will call you day and night – even on the weekend. If you just ignore them without sending them a letter to stop contacting you, they will begin calling your friends and relatives.
Once you are seriously behind, the lender or collection agency will have to make a determination as to whether they are going to sue you to try to collect payment. If you get anywhere close to this point, you should seriously consider credit card debt negotiation. If the lender sues you, chances are they will receive a judgment for the full amount that you owe them, plus interest and fees.
Once they have this, they will then very likely attempt to garnish your wages. This means that the creditor will get a portion of your income each month prior to you being paid.
All of these are unpleasant experiences that most people would prefer to avoid. Because of this, your best bet is to communicate with your credit card company as soon as possible. Be honest about your situation and what you can afford to pay. You can negotiate credit card debt yourself, or hire a firm to negotiate credit card debts on your behalf. Debt settlement can be a good way to deal with your situation.
Most companies would rather get something rather than nothing, and will be more than willing to work with you to help you through a bad period. For this reason, you may be able to set up a payment plan and still pay off your account in full over time.
As a last resort, you could consider working with a reputable debt settlement or credit counseling company. Both of these options should be considered thoroughly and only implemented if it is the last option you have available to you prior to bankruptcy.
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