It is better to go to bed without dinner, than to wake up and not be able to pay the credit card.
I wanted to start this text with some testimonies that will exemplify the problems that are going through today, millions of Mexicans who cannot, for different reasons, pay the credit card. Of course there are also people who use the credit card and know from the beginning that they will not pay, but that is a different case.
I want to focus on people who stop paying their debts, because “something happened”; loss of employment, collapse in sales or a dispute with the financial institution. Eye, I do not want to say that these people are not responsible, because with planning and preventive measures, they would not have reached that precarious situation, but at least they are worried about not being able to settle their debts.
A survey published in Defense of the Debtor, SC reports that seven out of ten people stopped paying because they lost their jobs, their sales fell or there was an external event (illness, accident, etc.) that severely impacted their income. Two out of ten people stopped paying because they have some kind of controversy with the financial institution, such as unrecognized charges or uncontracted insurance, and only one person in ten stopped paying their debts because they simply don’t want to do it anymore.
We now have a broad picture of the situation and we know that most people do not stop paying for pleasure. Now I will tell you what happens when you stop paying your credit card.
What happens when I stop paying my credit card?
Each bank has developed different collection methods, they have even specialized according to the financial product. In most credit cards, the first step of the collection procedure is to make calls with the objective of “remembering” the payment date and the amount to be paid. Most of these calls are made in friendly terms, although I have also learned of some cases in which collection is done aggressively from the beginning.
1 to 29 days late.
As I said, from the first day of delay it is possible that the bank seeks to contact you. The tone of the call will be to remind you that your payment date has passed and they will want to know if you had any problem for which you did not make the payment. If you require it, you may be guided by information. They will ask you to tell them a date on which you would be making the payment, otherwise they will continue the calls.
After 72 hours of delay, the authorizations for new purchases will be suspended and if you enjoyed a preferential interest rate, you may suffer an unpleasant increase and the situation will be further complicated, and collection charges will also apply. This commission ranges from 250 to 495 dollars for collection costs.
After the first 30 days.
The bank is obliged to inform the Credit Information Companies about your delay. In addition, the calls will continue and you may also make calls to the people you left as a reference. You will be invited to make the payment, even if it is the minimum payment.
After 60 days
The calls will be more frequent, not only for you, but also for the people you left as a reference, they may even be rude, with the purpose of pressing you and paying as soon as possible. At this point, the bank is free to hire a collection office that supports them in their collection. In addition, your information is updated in the Credit Bureau and your history is more than 60 days past due.
90 days later.
The bank has the obligation to report your account to the Credit Information companies as an account that can cause bankruptcy, that is, it will not be paid, and will have a red sign. The safest thing is that you start receiving calls and collection letters from a collection office. Collection offices are not characterized by being very friendly, so they will harass you all the time, including the people you left as a reference.
The point of no return, after 120 days.
This is where things get worse, because the bank will take your account as a loss, and it is most likely to sell your debt as part of a portfolio of bad accounts to a collection office.
More or less functional. Suppose you owe the bank one hundred thousand dollars. The bank will sell your debt to the collection office in fifty thousand. This means that everything that charges the collection office above fifty thousand dollars will be your profit. This is just an example, the data is totally fictitious, as the figures vary according to the type of overdue portfolio and the bargaining power of the collection office. For that reason, collection bureaus have very unpleasant ways of charging, if not undue, because their profit depends on it.
Apart from generating a lot of stress and discomfort, your credit history will already have a breakdown. In school terms, this is like failing the extraordinary math exam.
I do not have to pay the credit card What do I do?
I know that the situation is very complicated and that many times we prefer not to know more about the matter because it stresses us. But that will only make the situation worse. Being left to duty is much more expensive than it seems, because you were denied all credits, you might even lose employment opportunities or similar things. So try by all means not to be left to duty. Here are some tips.
- Get informed Take the last statement of the credit card, so you have very clear the amount of your debt, capital and interest, as well as the CAT and annual interest rate, also if the card charges annuity and commissions and services included that you They are charging.
- Determine your ability to pay. To your income you must subtract the expenses for your basic needs such as food, transportation and housing. All expenses that are superfluous as the gym, music and video streaming, you must cancel them. The difference between income and expenses must be positive, that is your ability to pay
- Approach the bank. Once you know your ability to pay, approach the bank and explain your situation. Ask them to freeze your debt, if you do not have much time behind, it is possible that the bank will propose a plan to months without interest. Do it with the intention of getting out of debt on the best terms and saving your financial situation. Do not accept any treatment that is above your ability to pay, because you will not be able to comply and it will be worse.
- Advance payments. Possibly the bank asks you to make an advance payment to start with the plan that they propose. If you are not able to do so, offer to make a smaller advance payment or make it later, maybe when you receive your bonus or some bonus, with the objective that you show that you are willing to pay.
- Avoid removals and discounts. There are currently many service providers that offer to reduce your debt by up to 80 percent. It is not advisable to accept payment agreements with withdrawals or discounts, because, even if they grant you a settlement letter, it will appear in your credit history that you had a take-off. This has negative effects and it will be very difficult for them to grant you a new loan. So you would be in the worst of all worlds, because you will have paid part of the debt, and still have a stain on your credit history.
- Comply with the plan offered by the bank. Not only because it is not due to the bank, but because it is a commitment you made and knowing that you could with that challenge will feed your spirit.
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