Missing credit card payments can come with some serious financial consequences. How a credit card delinquency is handled depends on how long the bill has gone unpaid. A credit card payment is considered “late” if it has been unpaid for at least 30 days after the due-date. However, credit reports list delinquencies in different ranges as to how late the payment may be, and includes the following categories:
- 30 to 59 days late;
- 60 to 89 days late;
- 90 to 119 days late;
- 120 to 149 days late;
- 150 to 179 days late;
- Over 180 days late.
Your credit report will not show a missed credit card payment so long as it has been made no later than 29 days past the due date. After 30 days has passed, the credit card company will likely charge a late fee and potentially increase the interest rate on the card. This fee and interest rate hike will be reflected in the next month’s bill.
However, if a genuine mistake was made or a valid reason exists for why the payment was missed, you should contact your credit card company immediately to see if they will waive the fee as a courtesy. If you have been a good customer up until this point and have a good payment record, most credit card companies will understand and be willing to work with you.
Whether they waive the fee is one issue, but the credit card company will likely report the fact that you missed the payment to the three major credit reporting agencies, Equifax, Experian and TransUnion. Your credit score will likely drop once this report has been made. If you have an otherwise stellar credit score, you can see the hit more noticeably as opposed to someone who has a lower credit score. This single missed payment can remain on your report for up to seven years, but if you are able to continue making your payments on time after this mistake, your score will rebound, and creditors will see that you are not a future risk.
If you are 60 days late in making your payment, the financial consequences will be more severe. You will incur late fees and a likely a higher interest rate, even more than the one you received when 30 days late. The credit card company may also bump the interest rate to a penalty APR, which can be expensive and can get as high as 29.99 percent. It is likely that this penalty APR will stay with you for up to six months before the card holder decides to lower the interest rate. The higher the interest rate, the longer it will take for you to pay down your credit card debt completely. You may find that the high interest rate is all you are paying with monthly payments and that you are not making any dent in the principal.
Payments that are 60 days late can hurt your credit, but just like with payments that are 30 days late, you can eventually bounce back from this slip so long as you demonstrate smart financial behavior.
However, as soon as your payments are past 90 days late, the credit card company will likely turn the account over to a collection agency. Many will wait until the payments are more than 180 days past-due before turning the account over to a collection agency and will simply try to collect on the debt themselves first. As soon as you are past 90 days, you will either be notified that the card company has sent the account to an in-house collection department of outside collection agency. After 90 days, not only will fees and penalties increase, but the cardholder may also lower your card’s credit spending limit.
If the account is more than 120, 150 or even 180 days late, this means you have missed at least four payments. You will see many of the same consequences that come along with being 90 days past-due, but the consequences are understandably harsher. Debt collections calls will increase significantly. If, at this point, the account was not previously sent to collections, the debt will likely be sold to a third-party collection agency. This step of selling the debt to a third-party collector is known as a “charge-off,” which basically means the credit card company has written the debt off as a financial loss on their books. It does not mean the debt is forgiven or gone, but it means a new company that has the right to collect on the debt owns the account. If your debt has been charged-off, this will reflect very negatively on your credit report.
You can work with the debt collectors on settling the account, potentially paying for a less than full balance, or you may consider consulting with a bankruptcy attorney. It is important that you act quickly, however, in the event the debt collector files a collection action and obtains a judgment against you on the debt and a wage garnishment. So long as the debt is within the Florida statute of limitations for collections, which is five years, the debt collector is within its rights to file a legal action against you to pursue collection on the debt. However, if a bankruptcy case is filed before a judgment is issued, the automatic stay will put an immediate halt to the collection matter to allow for the bankruptcy process to occur. Since credit cards are unsecured debts, bankruptcy is often the best option for an individual struggling with insurmountable credit card debt.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.