If you have the habit of missing credit card payments, your credit score will keep diving downwards. When you are up to 30 days delinquent, your issuer has to report you to the credit bureaus. It gets worse as the number of days increases. Credit card default happens when you’ve become severely delinquent on your credit card payment.
Your credit card is the default when you miss payments for six consecutive months in a row. It not only affects your credit score but can lead to a pile-up of late fees and interest. Your credit card issuer will likely close your account and report the default to the credit bureaus. Unfortunately, your options for clearing up the credit card default may be limited because of the number of payments you’ve missed. However, there are a few ways you can deal with it.
Options for Dealing With Credit Card Default
Pay the account in full
Of course, at this point, your credit issuer expects you to pay the account in full. He may not be willing to consider any arrangement because your credit card has entered the default zone. So, if you can, the best option is to pay the account in full. First, try negotiating a pay for delete where the credit card issuer removes the account from your credit report in exchange for payment.
Settle the account for less than the amount due
Settling the debt is also a negotiation. The creditor doesn’t have to accept an amount lower than the balance due, but some can be persuaded.
- File bankruptcy | Dealing With Credit Card Default
Depending on the extent of the default and any other debts you have, you may consider filing bankruptcy to either restructure your debt and make it more affordable or to have it discharged. Note that bankruptcy stays on your credit report for 7-10 years, so it’s not a decision to take lightly.
You can ignore the account, perhaps decide what to do about it later on down the road. Note that the creditor can still pursue you for the debt, list it on your credit report, and may even sue you as long as the statute of limitations is in effect.
If you’re getting calls from debt collectors, you can stop them by sending a cease and desist letter. This letter only works on third-party debt collectors, not the original creditor.