What Happens When Your Credit Card Payment is Over 90 Days Late?

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What Happens When Your Credit Card Payment is Over 90 Days Late?

When you use a credit card to make purchases, you are essentially borrowing money from a lender, which you agree to repay with interest according to the terms of your agreement. If you fail to make at least the minimum payment by the due date, you may face penalties, fees, and damage to your credit score. If you still don't pay for more than 90 days, the consequences can become even more severe.

Legal Action

One possible consequence of being over 90 days late on your credit card payment is that the creditor may sue you in court to recover the debt. This could result in a judgment against you, which could allow the creditor to garnish your wages, seize your assets, or place a lien on your property. You may also be responsible for the creditor's legal fees and interest, which can add up quickly. Therefore, it's important to take any communication from your creditor seriously and try to negotiate a repayment plan or seek legal advice if necessary.

Charge-Off

Another consequence of being over 90 days late on your credit card payment is that the creditor may charge off your account, which means they consider the debt uncollectible and may write it off as a loss for tax purposes. However, this does not mean that you are off the hook for paying the debt. Instead, the creditor may sell your debt to a collection agency, which can continue to pursue you for payment. Charge-offs can also stay on your credit report for up to seven years and hurt your credit score, making it harder to get approved for credit in the future.

Collection Calls

A common consequence of being over 90 days late on your credit card payment is that you may receive frequent calls from collection agencies attempting to collect the debt. These calls can be stressful and annoying, and may even violate your rights if they use abusive or deceptive tactics. However, you can take steps to stop or limitcollection callsby sending a cease and desist letter or invoking your right to dispute the debt. You may also want to consider debt settlement or credit counseling services to help you negotiate a lower payoff amount or a more manageable payment plan.

Rebuilding Your Credit

If you've experienced the consequences of being over 90 days late on your credit card payment, you may wonder how to rebuild your credit and avoid similar situations in the future. One way to improve your credit score is to make all your payments on time, including your credit card payments, loans, and bills. You should also try to pay more than the minimum amount due whenever possible, as this can reduce your interest charges and help you pay off your debt faster. Additionally, you may want to monitor your credit report regularly to check for errors or fraud, and consider applying for a secured credit card or a credit-builder loan to establish a positive payment history.

Conclusion

Being over 90 days late on your credit card payment can have serious consequences, such as legal action, charge-offs, and collection calls. However, you can take steps to minimize the damage and rebuild your credit over time. By being responsible with your credit use, paying attention to your statements and due dates, and seeking help if you need it, you can avoid falling into a debt spiral and enjoy the benefits of credit without the risks.