If you fail to make repayments over a period of time the bank could cancel your credit card. In rare circumstances, your bank may sell your credit card debt to a debt collector. Debt collectors also have legal obligations to consider any hardship request you make in relation to paying this debt off.
Credit card debt won't affect you forever
Credit card debt doesn't go away, but the consequences of credit card debt can only last for 7 years. After this time has passed, credit bureaus will give you a fresh start and delete the debt from your report.
Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit scores may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.
When a credit card account goes 180 days past due, the credit card company must charge off the account. This means the account is permanently closed and written off as a loss. But you'll still be responsible for any debt you owe.
Eventually, the card issuer will charge off your account. That means it will close your credit card, write it off as a loss, and send the debt to collections. The card issuer may have its own internal collection agency, or it may sell the debt to a separate collection agency.
Credit card companies rarely forgive your entire debt. But you might be able to settle the debt for less and get a portion forgiven. Thank You.
If your credit card debt has increased to the point where there's no realistic chance of you paying it off in full, or it'll take you an extremely long time to pay it off, then you may be eligible to have some or all of your debt written off through a debt solution.
Debts you're not responsible for
You might not have to pay a debt if: it's been six years or more since you made a payment or were in contact with the creditor.
Bottom Line
If you don't use a particular credit card, you won't see an impact on your credit score as long as the card stays open. But the consequences to inactive credit card accounts could have an unwanted effect if the bank decides to close your card.
Information about missed payments, defaults or court judgments will stay on your credit file for six years. These details are always removed from your credit file after six years, even if the debt itself is still unpaid.
If the debt is not collected, then the debt collector does not make money. In many cases, although you would think that debt collectors would eventually give up, they are known to be relentless. Debt collectors will push you until they get paid, and use sneaky tactics as well.
A credit reporting company generally can report most negative information for seven years. Information about a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Bankruptcies can stay on your report for up to ten years.
Use this 11-word phrase to stop debt collectors: “Please cease and desist all calls and contact with me immediately.” You can use this phrase over the phone, in an email or letter, or both.
Once a debt is statute-barred, the creditor will no longer be to get a CCJ or money judgment, and they won't be able to make you bankrupt. However, as the debt still legally exists the creditor could contact you to ask for payment, if the creditor is not regulated by the FCA.
On the other hand, here's what you shouldn't do. Don't give a collector any personal financial information, make a "good faith" payment, make promises to pay, or admit the debt is valid.
Credit experts advise against closing credit cards, even when you're not using them, for good reason. “Canceling a credit card has the potential to reduce your score, not increase it,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.
In general, it's best to keep unused credit cards open so that you benefit from a longer average credit history and a larger amount of available credit. Credit scoring models reward you for having long-standing credit accounts, and for using only a small portion of your credit limit.
Closing a credit card with a zero balance may increase your credit utilization ratio and potentially drop your credit score. In certain scenarios, it may make sense to keep open a credit card with no balance.
Unsecured debts typically have a statute limitation of six years, after which the debt becomes unenforceable. However, it's not quite as simple as waiting six years for your debt to expire, because your creditors can chase you for payments and even take you to court over missed repayments within this limitation period.
Even if you accidentally miss a payment, it can have financial repercussions and damage your credit score for years. Not only can it make it difficult to get approved for housing or a loan, but you may also face late fees, interest increases and legal actions from the card issuers.
But there comes a time (usually 90 to 180 days later) when it is no longer profitable to carry the debt, and they decide you are not the good customer they thought you were. That's when the credit grantor will sell the debt.
It may be possible to ask your creditors to write off the debts if you have no available income to make any payments and have no savings or assets. You need to convince the creditors that your circumstances are unlikely to improve in the future.
Credit cards dues can adversely affect you
Opting to pay the minimum amount due is a typical scenario when the cash situation is tight. But the problem is that credit card debt attracts almost usurious interest rate charges and penalties. It is little wonder, then, that Kelkar, too, fell into a debt trap.