Bad credit 101: What happens to delinquent credit card accounts?

Ever wonder what happens to delinquent credit card accounts?  You can stop making payments on your monthly credit card statement --or continue reading.

Compare Credit Cards for Bad CreditIf a credit card account remains delinquent for long enough, the entire credit card balance will become due and payable.  That includes all the credit card's late fees, over-the-limit fees, interest charges, legal fees and any additional applicable fees.

All consumers need to be aware that the credit card issuer expects the entire balance to be repaid in the case of default, and will not simply wait endlessly for the money they are owed.

For credit card accounts that remain unpaid, the first 180 days involve what could be termed normal collections.  The delinquent cardholder can expect to receive letters, phone calls and other similar methods requesting that they pay what is owed on their credit card.

After the first 180 days have passed, the credit card account charges off.  That means that although the cardholder continues to owe the money, for accounting purposes, the debt becomes considered a bad debt.

When the debt becomes a bad debt, the credit card user can expect to have negative marks on their credit report resulting in a bad credit history.  Additionally, responsibility for collecting the debt can shift from the credit card issuer to an outside firm or an attorney.  This is when a debt collection agency may get in touch with you.

After the debt goes unpaid for some time, the cardholder may eventually receive a court summons.  The court will be asked to grant judgment in favor of the credit card issuer.

Beyond that point, the cardholder may get hit with wage garnisheeing, property liens and more.  While these are going on, the cardholder's fees will continue to mount.  The credit card bill continues to grow as their credit score continue to fall.

Assuming all this sounds like something you'd rather read about than experience firsthand, be sure to stay on top of your monthly credit card payments.  If you cannot afford to make at least a minimum payment, interest charges and fees could mean that your bill gets out of control very quickly.  And, that could mean that your account could become delinquent if you don't take action.

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Updated: 03-20-2019