You are probably using your credit card & paying back on time. But many times we usually forget to pay back the bill & have to incur late fees and charges for paying back later. This can happen due to medical emergencies, a busy schedule, or short of money. Still, it is ok to pay back the bill with some late fees. But what if you don’t pay back the credit card bill for 5 years? What happens if I don’t pay my credit card for 5 years?
If you do not pay back the credit card in 5 years, then it will majorly affect your credit score. Moreover, you will be liable to pay back the bill with interest & late fees of 5 years. Even your bank or collector can sue you & ultimately, you may need to file for bankruptcy.
Let’s know about the consequences in detail & what you can do about it.
What happens if I don’t pay my credit card for 5 years?
Five years is a really long time & your bank or credit card issuer may not wait for such a long time. Therefore, they will sell your debt to a collection agency, and everything will be in the agency’s hands.
Here are the two big complications that you have to face:
1) Legal Complications & Monetary Burden
In case you do not pay your debt for five years, you will get sued & and chances are you will lose the case. If that happens, wages might be taken from you; you might also have your bank accounts frozen, have a lien put on your house, or lose any other assets.
Apart from this, you will have to pay the legal fees of the card issuer & collector agency.
Overall, it will become a burden on you.
2) Impact on Credit Score
The biggest hit will be on your credit report & your credit score will only become lower the later you pay the bill. Most banks or credit cards issuer don’t report the late payment for 60 days, so there is no impact on credit score.
But if you will pay later or for more than five years, the credit score will become lower. You may have trouble getting a good rate on a mortgage, a car loan, or new credit cards in the future if your credit score drops too far.
Even if you lose in court, if you still can’t afford to pay off your credit card debt, you might consider declaring bankruptcy and proving legally that you are unable to do so.
Most people can apply for Chapter 7 or Chapter 13 bankruptcy, which is the two most common categories. A third-party trustee must sell nonexempt assets in order to pay your creditors in a Chapter 7 bankruptcy.
According to Chapter 13 bankruptcy, you have to create a repayment plan for your obligations over a period of three to five years, with payments made to a trustee who pays your creditors.
What happens if I don’t pay credit card and leave country?
Even though you may have left the nation, debt collectors can still collect on your debts. This means that they have the right to sue you and seize your property even if you have left the country.
The debt collectors may also be able to reach you outside of the United States, depending on where you relocate. However, suppose the expense of collecting your debt exceeds the amount you owe or the amount they hope to recover. In that case, the collections agency is unlikely to pursue the collection of your debt.
In the event that you depart the United States, your credit card history will not follow you. Your U.S. credit history will still be punished and damaged, but you won’t have any credit history in your new country.
One downside to moving abroad is that you will need to build credit score from scratch.
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What happens to credit debt when you die?
If a person dies with credit debt, the credit card company is informed about the death of a debtor, and they will no longer assess penalties, such as late fees, on the debtor’s account.
Often, the debt will be passed on to the next person who is responsible for it. This could be a co-owner of the account, a spouse, or the deceased person’s estate.
The ability to transfer the debt to a spouse is dependent upon the deceased person’s residence in a community property state, such as Nevada, , Arizona, California, Idaho, Alaska, Louisiana, , New Mexico, Texas, Washington, or Wisconsin.
It is the executor’s job to liquidate estate assets in order to pay off the credit card debt if it is passed to the estate.
If the value of the estate is less than what is owed, then debt collectors usually have no way to get the money they want from the debtor.
What should you do in this situation?
It’s possible that creditors will be less eager to work out a payment plan if you put off taking care of late payments. However, here are the steps you can follow in dealing with late credit card payments:
1) Contact the Credit Card Company
If bad things were going on with you, and you could not pay back the credit, you can contact the credit card company. They might still be into resolving the issue & settling for the money.
Lenders may offer a reduced payment for up to six months or a waiver of the minimum payment.
2) Check for Debt Consolidation Plans
If interest rates are too high, balance transfer credit cards and debt consolidation loans might help you meet your monthly payments.
In order to pay off your debt interest-free, you can use a balance transfer credit card with a 0% introductory APR for up to 12 months.
3) Take advice from Credit Counseling Agencies.
After analyzing your finances, a credit counselor can assist you in creating a budget and advise a debt management plan, or DMP.
4) Consider Bankruptcy
If you’re drowning in credit card debt, there are two options for you: Chapter 7 and Chapter 13 bankruptcy. So consider bankruptcy if you don’t have much money to pay back your debt.
It’s never a good idea to not pay your credit card bills. You will have to pay back in any way in the end. So consider paying the amount on time & enjoy a stress-free life. Even if you are not able to pay back one or two times, then contact the bank & tell them about your situation; they may provide you some relief.
We hope you found this article helpful & informative. Leave us a comment below if you have any thoughts or suggestions.
Thank you for reading!