Jail for Non-Payment of Credit Cards?

At first it seemed like a honeymoon with your credit card. You enjoy a 0% intro APR with a no annual fee credit card. You go out shopping without any concerns of paying the interest. It’s just like shopping with cash and paying it back on an installment basis. Like most of the common 0% intro APRhave it for 15 months.

Then the problem sets in when the 0% rate expires. Little did you know that the balance from your last month’s bill will be transferred to your current rate, and you have to live with a rate of more than 15%. From 0% to 15% is big money considering the things that you paid for with your credit card monthly. You try to pay the credit card company, but all you end up paying is the interest rate, and the charges will just pile up every month. In the end, you are swamped with the payments, and you’re forced to declare bankruptcy. You don’t have any money to pay them, and one day they show up to your door with papers telling you “see you in court”.

The good news is, you will not be going to jail just because you can’t pay your credit card bills. It’s only a civil case and you can’t really be jailed for this. All that will happen is that they will give you credit repair to help you with the payment. They will be giving you leeway in your payment plan, and you will have an easier time in paying that credit card debt that you have incurred.

If you think you got off easy with your credit card debt, think again. You may have a great plan in paying those debts, but your credit rating is so low that you will not be qualified for anything at all. Your salary will just go to your credit card debts automatically. It will take more than two years to repair your debt, and it will take more than seven years if you want the record of declaring bankruptcy to be removed. It’s like going into financial jail because of the limited resources you have, and the support that you need to pay your debt is really limited.

Considering this will happen if you don’t pay your credit card bills, make sure you act on them before something bad really happens that will affect in your credit rating. Aside from paying your bills on time, you should at least pay your bills with the principal. If you slowly clear off your credit card payments, you will gradually see the difference on your credit card statement, and most of all, your credit rating will go up and your 0% APR credit card application will not last for only six months as when you were a student, but it will last for 15 months with better rates and more cash rewards. It’s definitely better than declaring bankruptcy.

This entry was posted on Wednesday, August 22nd, 2007 and is filed under Credit Cards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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One Response to “Jail for Non-Payment of Credit Cards?”

  1. 0 intro apr on December 13th, 2007 at 10:17 am

    0 intro apr…

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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.