Credit cards are a convenient and common method of paying for items when you do not have readily available cash. The problem arises when you spend more than you can pay off at the end of the month and accumulate interest.
When interest and late fees add up, it is harder for you to catch up, which perpetuates the cycle, increasing the amount you owe. Besides this, if you find yourself unable to pay off your credit card bills fully and on time, you may face other consequences.
Negative impact on credit score
Failure to pay credit card debt promptly can have a detrimental effect on your credit score. Creditors report late payments to credit bureaus, and as a result, your credit score may decrease. A lower credit score can hinder your ability to secure loans and obtain favorable interest rates. It may even affect employment opportunities that require a good credit history.
If your credit card debt remains unpaid, creditors may initiate collection efforts. This could involve contacting you directly, either by phone or mail, to request payment. Persistent non-payment may lead creditors to employ debt collection agencies to recover the outstanding amounts.
In more severe cases, creditors may choose to take legal action to recover the unpaid debt. This could result in a lawsuit filed against you. If the court rules in favor of the creditor, it may allow creditors to pursue additional measures to collect the debt. This may include wage garnishment or asset seizure.
Credit card debt is far from uncommon. When managed properly, it can improve your credit and help you manage expenses or even earn rewards. Failing to pay credit card debt in Maryland triggers a series of escalating consequences, from accumulating late fees and damaging your credit score to potential legal actions and asset seizure. It is essential to address credit card debt issues proactively. Chapter 13 bankruptcy allows individuals to repay their debt over time on a restructured debt plan while free of creditor hassle. It can be a valuable tool for reducing or getting rid of credit card debt.