Let’s face it, most people in New Jersey have at least one credit card and have not always paid it on time and in full each month. In fact, the average American has four credit cards and New Jersey residents have an average credit card balance of over $7,000. There are times when credit card debt can get out of control. A person can face numerous credit card bills along with a mortgage or rent payment, utilities, etc. If an unexpected expense comes out of nowhere or there’s just too many payments to make with a limited income, problems can occur. So, what happens if a person does not pay their credit card bill?

If a person doesn’t pay their credit card bill there can be may consequences. The following are the typical steps that credit card companies take with their customers when they don’t receive a payment.

Late fees

Typically, credit card companies charge a late fee if they don’t receive a payment. The fees can add up quickly and each month that the bill goes unpaid, new late fees are added.

Delinquency

If a person goes the full 30 days after a bill is due without submitting a payment, then credit card companies will consider the account as delinquent. A delinquent payment can result in a drop in a person’s credit score and multiple missed payments can result in a significant credit score drop. Once a person goes around 60 days without a payment they can expect to receive frequent phone calls from the credit card company and eventually the card will get turned off.

Charge-off

If a person continues to not pay their credit card bill the credit card company will write off the balance in what is known as a charge-off. The IRS will expect a person to pay taxes on the canceled debt and it can have a significant effect on a person’s credit rating.

Following a charge-off

After a credit card company has charged-off a person’s debt they may take legal actions against a person or they may sell the debt to a collections company. A judgement or a collections on a credit report is serious.

Running away from credit card debt is not the answer. If a person is facing serious credit card debt they may want to speak with an attorney to see if bankruptcy is a good option.