Some people do the blame game when they find themselves emerged in credit card debt. We refuse to accept that we had anything to do with it. However, when you think about it, we are responsible for our credit card debt. Whether you are directly or indirectly at fault, you allowed it to happen.
While some people will try to solve the problem, there are those who are too scared to even face the problem that they have. Some are in denial and they come up with various excuses to pay for their dues. Well there are so many things that you can do wrong while in debt but there is nothing worse than running away from everything. This is not one of the problems that will go away if you pretend that it is not there.
What happens when you ignore your credit card balance
There are many negative implications when you stop paying your credit card debt. It doesn’t matter if your ex-spouse got you into so much debt or the unemployment forced you to rely on your cards. The fact that the account is under your name, that should be enough reason for you to do something about it. Here are some of the things that will happen if you ignore your credit card debt.
It accumulates. Like it or not, as long as you have a balance, the interest amount on your debt will keep on piling up. And if you miss your payments, you can add the late penalty charges to what you owe. It will keep on growing until you decide to finally face your problems.
It can lead to a lawsuit. If 6 months had passed and you still haven’t done anything to tell your creditors that you are willing to pay your dues, you are in danger of being sued for it. The creditor has every right to file a case against you and that can lead to wage garnishment. Although there are laws protecting you from abusive collection practices, your debt remains to be your responsibility.
It makes you waste money on interest. The longer you wait and the higher your debt goes, the harder it will be for you to pay it off. When your debt amount get bigger, you are expected to pay bigger amounts every month. That means more money wasted on interest amount. That can seriously destroy your monthly budget and keep you from enjoying the money that you worked so hard to earn.
It destroys your credit score. When you stop paying your credit card debt, you are affecting 65% of your credit score. 35% is dependent on your payment history and that means it gets damaged when you stop paying on time. On the other hand, 30% is affected by your growing debt amount. Not only are you making your debt worse, you are also destroying the credit score that will give you the chance to build your financial future.
It keeps you from learning your lesson. Any negative situation is an opportunity to learn a lesson. By refusing to acknowledge the problem, you are depriving yourself of the chance to learn proper financial management skills. Things like budgeting, saving and smart spending – these are the things that will help you live below your means so you can get and stay out of debt.
Best debt relief options to pay off your monthly credit card bill
Now that we have provided you with the negative effect of not paying your credit card debt, we hope that it convinces you to do something about it. While we will never claim that it will be easy, we can provide you with various options to help you get out of debt.
Credit Counseling. This debt relief option enlists the help of a credit counselor who will help analyze your debts and point you towards the best payment option for you. The counselor will also help educate you about personal finance.
Debt Management. This is the second part of credit counseling – if you qualify for it. You and the counselor will create a DMP or debt management plan that will be used to negotiate a lower monthly payment. When the creditor agrees, you can send one payment for all your credit card debt and the counselor will be in charge of distributing that to the companies you owe money too.
Debt Consolidation Loan. This involves getting a loan that will pay off for all your other debts. This will help you restructure what you owe and keep the interest rate from burying you in debt.
Debt Settlement. This debt relief option aims for debt reduction. You will negotiate with your creditor so they are informed of your financial crisis. The goal is to allow you to pay only a portion of your debt and forgive the rest of it.
Bankruptcy is also an option here but given the negative effects that it has in your financial life, we discourage this. Try to use any of the options we mentioned above before filing a petition for bankruptcy.
It helps to use an online calculator like the one that IAPDA (International Association of Professional Debt Arbitrators) has provided consumers. The IAPDA consumer options calculator will help you determine which among the debt relief programs is financially the best option for you. CNN Money also has a simple debt planner that you can use to initially map out how you can finish paying off your dues.