Credit cards can be a convenient way to make payments, but they can also help you accumulate a large amount of debt. If you find yourself in a position where you cannot make your credit card payments, you could face serious consequences. At this point, your credit could be damaged and you could have lawsuits filed against you.
Higher Rates
When you default on a credit card debt, it can have a significant effect on your interest rates. Most credit cards have a default rate associated with them. If you default on one credit card, all of your other credit cards will also raise their interest rates to the default rate. This interest rate could be as high as 30 percent with some credit cards. This means that the payments on your debt will increase significantly.
Debt Collectors
After a certain amount of time passes with no payments from you on your bill, the credit card company may hire debt collectors to contact you. Once this happens, you should expect several phone calls and letters from the collectors. The debt collectors will try everything in their power to try to get the money from you. The collectors may try to contact you several times per day in hopes that you will pay your bill. You can stop the collection calls by asking the collectors to contact you in writing or by hiring a lawyer.
Lawsuit
If the debt collectors do not have any luck in trying to collect the money from you, the credit card company could file a lawsuit against you. When the credit card company files a lawsuit, unless you can prove that you did not accumulate the debt, the court will issue a judgment against you. Once the credit card company has a judgment, it can take steps to garnish your wages or to levy your bank account to get the money you owe.
Credit Damage
When you do not pay your credit cards, it will negatively affect your credit history. Every time you try to get financing for anything, the lender can look at your credit report and see that you defaulted on a credit card. This will make it hard to get approved for financing and, if you do get approved, the interest rates will be higher. This credit damage will also affect your insurance premiums and it might be difficult to rent a property since landlords usually look at credit histories.
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