What can credit card companies do to recover debt?

Out of control debt can cause severe financial problems for individuals and families that do not manage credit responsibly. Many people opt to simply stop paying their credit card bills and ignore their creditors. But the questions remains, what can credit card companies do to recover debt? They will not simply stop coming after you or forgive your debt. Credit card companies have a series of options available to them that you should be aware of.

Credit Card Companies CAN Harass You

It is important to remember that credit card companies want their money and, frankly, right now they need it. The recession and spiking unemployment rate has forced many Americans into not making their credit card payments. When you have to choose between losing a home and not paying a credit card, there really is no choice. Though credit card companies understand the pressure people are under they are not very compassionate.

The first step a credit card company takes when you miss a payment is to call you. This is not simply a courtesy call to see why you missed your payment. They will call you several times a day and into the night everyday. If you don’t answer, they will leave voicemail messages and answering machine messages every time.

This does not just apply to your home phone. They will call every phone number they have on file for you. This could include your home, cell, work, your spouse’s cell, or an emergency contact. They will call these numbers several times a day as well. This could be embarrassing or even cause you to get in trouble at work. You can ask them to stop, but the calls will continue.

If you do decide to answer, they will tell you all the pending consequences for missing payments and ask you to set up an auto withdraw. They will try to pressure you into an exact date and will ask if you want to use the bank account you have on file. Even if you make arrangements to pay in a week or two, you will continue to receive phone calls until the payment is made. If it is a partial payment the calls will continue after the payment is made as well.

Credit card companies will also send you letters explaining what will happen if you don’t pay your credit cards. They will send letters to every address they have on file for you including your job. They will send several letters a week as well as e-mails outlining that they have attempted to contact you. They are compiling a list of phone calls, letters, and e-mails to prove, should your case go to court, that they tried to work things out with you.

Credit Card Companies CAN Interfere With Your Assets

If you don’t make a payment deal with your credit card company, they will turn your debt over to a collections agency. After months of trying to contact you, your case can be turned over to the legal system. A judge will then decide if the action is justified. In most cases, the judge will side with the credit card company because you owe them a debt you cannot pay. You are most likely in the wrong. This is why it is beneficial to work with a debt settlement company who can negotiate on your behalf with the credit card companies before your case ends up in court.

Once a judgment is passed on the side of the credit card companies, a lien can be placed on your home. This does not mean that you will lose your home. The court cannot force you to sell your home. What a lien means is that if you sell your home, you must first pay your debt to the credit card company before you take any profit from your home.

In addition to a lien, credit card companies can garnish your wages. Once a judgment is made, the company needs to show your employer a copy of the judgment and then they can garnish your wages until your debt is paid. This can cause additional financial problems if all of your income is going to pay your debt.

The last thing a credit card company can do is seize your bank account(s). A judgment gives the company the right to take whatever money you have in your checking, savings, or other bank accounts to go towards your debt. Any deposit made will be reported to the company so that they can take it.

Credit Card Companies CAN Lower Your Credit Score

Each missed payment will be reported to the credit bureau. The credit bureau is in charge of keeping track of your credit history. Negative items on your credit report lower your credit score. The lower your credit score, the harder it is to get approved for things like mortgages, car loan, or even car insurance. If your case goes all the way to a legal judgment, your credit will be ruin.

Ruined credit takes years to repair; but, being responsible after your debt is taken care of will slowly raise your score and get you on the right track. Unpaid debt has serious consequences. Speaking with your credit card companies before you miss a payment. Letting them know your situation can help you avoid many of these consequences.

Take the time to sign up for a credit monitoring service that also offers free credit reports and then be sure and use our free credit card search tool to compare credit cards.