BILL'S ANSWER
For credit card accounts that remain unpaid, the first 180 days involve what could be termed normal collections. The delinquent cardholder can expect to receive letters, phone calls and other similar methods requesting that they pay what is owed on their credit card.
After the first 180 days have passed, the credit card account charges off. That means that although the cardholder continues to owe the money, for accounting purposes, the debt becomes considered a bad debt.
When the debt becomes a bad debt, the credit card user can expect to have negative marks on their credit report resulting in a bad credit history. Additionally, responsibility for collecting the debt can shift from the credit card issuer to an outside firm or an attorney. This is when a debt collection agency may get in touch with you.
After the debt goes unpaid for some time, the cardholder may eventually receive a court summons. The court will be asked to grant judgment in favor of the credit card issuer.
Beyond that point, the cardholder may get hit with wage garnishment, property liens and more. While these are going on, the cardholder's fees will continue to mount. The credit card bill continues to grow as their credit score continue to fall.
Assuming all this sounds like something you'd rather read about than experience firsthand, be sure to stay on top of your monthly credit card payments. If you cannot afford to make at least a minimum payment, interest charges and fees could mean that your bill gets out of control very quickly.
In your case, in the initial period of default, your two other loans will not be affected as far as their interest rates are concerned. But if the credit card delinquency persists for more than 180 days then my only concern would be the home loan that you co-signed for your son, the creditors might start to make collection calls to your son just because they see that you are a co-signer there.
Credit card debts are unsecured, meaning that the creditors do not have a collateral property to fall back on in case of your default, which also is the reason that the credit card's interest rates vary. Mortgages on the other hand are secured loans, and usually have a fixed rate of interest for the entire term of the loan.
Your default on one credit card will definitely increase the rates on your other credit cards. This is because, buried in the fine print of your agreement is a clause called "Universal Default", which simply means that if the creditor perceives a payment risk from you they have the right to jack up their interest rates.
I hope this information helps you Find. Learn & Save.
Best,
Bill
Brownsville, TX | April 21, 2011
Ralston, NE | January 04, 2011
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