What Happens When You Miss Multiple Credit Card Payments?

You must make your credit card payments on time according to your contract. Typically, you will have a standard monthly payment to simply keep the card open, if it has a balance. Then, you can also pay down the balance if you choose. While you do not have to pay down the balance at any point, you do need to make the monthly payments on time in order to prevent negative consequences. 

Your Credit Score Drops

The first consequence you will have to deal with is a drop in credit score. This only occurs if you are 30 days late on your payment. The moment you receive notice you have an overdue payment, you should assure to pay before the amount goes 30 days past due.

If you are assessed with a 30 day late, your overall score will drop, and your report will also show the negative mark. Future lenders will be able to look at your report and know exactly which month you were late in, and by how much. The APR on your credit card may adjust higher if your score drops.

Your Loan Goes to Collections

If you do not respond to the lender's notices for payment, they will turn your loan over to collections. You should look at your credit card contract to see the exact terms of when your lender is allowed to report you late payment to a collections company.

You should confirm the company has legal right to collect from you once they contact you. Aside from being a nuisance, collections companies can add to the already negative scores on your credit. When a loan goes to collections, this will also be noted on your report.

You Default on the Loan

Each credit card contract lays out explicit terms of default. Simply being late on a payment is not cause for default. However, your contract may state being late on multiple payments is grounds for a notice of default. You will receive this notice in written form, and you will likely also receive a call from a collector.

Once you have received notice of default, it is time to make fast and serious efforts to resolve the issue. Typically, the credit card company will give you a small window to resolve the issue before the card is closed and the default hits your credit score. Once this happens, the company can take legal action against you. 

Your Assets are Seized

If you have placed collateral in order to secure the loan, your collateral will be seized if you default. This is the worst-case scenario in any loan contract. However, it is a definite possibility if you have defaulted on your loan. You cannot avoid the seizure of assets by fleeing; if you do so, you will likely be caught down the line. Instead, it is best to deal with the issue head on by settling the debt with the lender.

You may try to make a cash settlement to avoid submitting your asset. A credit counseling agency may be able to help provide you with tools to settle your debt.

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