Do you have to pay for a credit card?

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Like most well-meaning credit card users who are a little behind, you probably didn’t think your account would be written off. You might not even realize that billing was the thing. Here’s how it goes: after six months of consecutive missed payments, credit card companies are releasing a defective “billed” account. Unfortunately, by the time you are so late in payments, it is almost impossible to get your account back on track.

What exactly is it?

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Before you are billed, your creditors probably call almost daily trying to see when you can make a payment on your account. But after charging, calls stop almost abruptly. You breathe a sigh of relief, thinking they are finally from your back, but you are not off the hook.

Many consumers have the misconception that billing means they no longer owe a balance. It’s easy to make that mistake – “stuffing” sounds a little like “write-off” and in the world of taxes, a “write off” tax reduces the amount you owe. Not so much in the world of credit cards and loans, at least not for you as a borrower.

When creditors collect bills, they declare it a loss and write it off on their own taxes. As a result, the creditor may owe the federal government a little less.

Do you still have to pay for a credit card?

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Even though your credit card company has declared a loss on your account, you are still responsible for paying off your debt.

The only exceptions are when you have debt released in bankruptcy or the creditor cancels the debt for some reason. Barring any of the events, the creditor can (and probably still will) still attempt to collect the debt, and might even assign or sell the debt to a third party collector to pick up the collection activities.

The repayment costs are harder to repay because the creditor at that point requires you to pay in full. You no longer have the privilege of paying monthly for a period of time. If you speak to a creditor, you may be able to negotiate a balance on two or three payments, but you will not receive the benefit of paying more months at your convenience as you could before repayment.

What if you don’t pay?

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If you choose not to pay the repayment, it will still be listed as outstanding debt on your credit report. You may have trouble getting approved for credit cards, loans, and other credit-based services (such as apartments) as long as your payment remains unpaid. The creditor or assigned debtor collects debts indefinitely, including calling, sending letters, and updating your credit report. As long as the debt is within the time frame of your state, you can even be sued for the debt.

Impact on your credit

Your creditor will report the amount and status of the deduction to credit bureaus for inclusion in your credit report. The payment status will remain on your credit report for the full credit report, unless you can negotiate a payment to clear with the creditor.

Even paying off the repayment will not remove the account from your credit report or delete the previous repayment status. While paying a charge does not help your credit score, it does make you look better in the eyes of potential creditors and lenders and more likely to get approved future applications.


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