The limits of debt

May 29, 2015

It’s not difficult to trace out the path some individuals and families take into debt problems. It’s not uncommon to see many people around us fall into debt problems with the current economic climate that we all see today. A few days ago it was easy to get credit, then the credit is used, and time passes and the debt becomes due. As time passes the payments can become much more difficult to make - this is the perfect formula for a financial disaster. You may to try to avoid or overlook your credit bills and collection letters - but late or early debt will arrived no matter what do to avoid the consequences.

Here is a cautionary road map for unpaid credit card bills.

First-period: 30 days or fewer Bills unpaid at the end of this month? It is not too late. If you spend a day beyond the 30 days of the grace period, this only makes your credit a past due debt. At this point, you can expect a phone call or a letter. The best thing to do in this situation is to simply call the Bank or visit the web site to make a payment as soon as possible. You may be able to avoid your unpaid balance being reported to the credit bureaus by trying to arrive at a mutual agreement that satisfies everyone.

Period 2: 60 days Letters of collection and collection calls will start to arrive. At this point the collection agents are probably still being polite, but obviously expect them to take a firm position on repayment. At this point the lender probably has already issued a report to the credit bureaus. You can also expect to pay a fine for being late at this time as well.

Period 3: 90 days At this point the Bank becomes more aggressive, much more aggressive. It is advisable to contact your bank or speak with one of the collection agencies to seek out an agreement for payment or better yet payment in full. Once payments are made, you are back on the right path and you can continue using your credit card normally again.

Period 4: Charging off your debt After 90 to 120 days, banks tend to take a more determined position and may refer the case third parties collection agents who will typically will initiate actions of collection. This means you have a serious problem in your credit record of course, therefore your credit card will be closed by the Bank during this time. You will no longer have the card available, and perhaps worse, you will have creditors calling you repeatedly and sending letters to collect the debt. You may be able to pay off the debt with collection agents because the banks probably may think that any amount of money it´s better than nothing once you cancel the debt completely.

Period 5: Jury Instances Now your debt has gone beyond the limits of agreement and the bank is not the only institution that you have to give some explanations to. You probably will also receive a notice to appear in small claims court for being sued for the amount you owe. You can fight the claim, but if you don't show or admit your guilt you could see a lien place on your salary or assets payoff the debt.