Delinquent Debts
Are you repaying only the minimum amount due on your credit card?
Are you late on mortgage or rent payments?
Do you have to take another loan to payoff your existing debt?
If you are facing these problems, you run a high risk of being saddled with delinquent debts. Many American consumers today are facing unmanageable debts. When a consumer fails to pay the creditor for goods or services rendered, beyond the 30 day period, the debt is labelled as a delinquent debt. Any amount that is still outstanding after 180 days is normally considered a charge off debt. However, be aware that a creditor can set any debt as a charge-off, should the creditor determine that it is ‘not collectable’. If any of your debts are marked as delinquent or charged-off, there can be a severe impact to your credit rating.
The American Bankers’ Association (ABA) has been tracking delinquent debts since 1973. According to the ABA, 4.81% of credit-card accounts had payments that were past due by 30 days or more. There was also a noted increase in delinquent payments on personal loans, auto loans, home equity loans and lines of credit. [Source:CNNMoney.com]
When the debt remains unpaid beyond 30 days and becomes delinquent it can have devastating effects:
- In addition to the late fees and penalties, interest rates may also increase significantly
- If you are delinquent on one account, it may prompt penalty rates on other accounts as well.
- Delinquent debts have adverse effects on your credit history.
- If the delinquent account is charged-off, it will stay on your credit report for as long as seven years. This may make it hard to get any type of further credit such as a credit card, car loan or mortgage
- In order to repay the delinquent debt, you may have to use your investments and savings funds, leaving you without assets or savings for the future
Additionally, creditors may hand over the delinquent account to collection companies, which could lead to intimidating collection calls. However, bear in mind that collection companies are regulated by Federal Fair Debt Collection Practices Act, which prohibits any acts of harassment. If you do receive any legal documents from your creditors, respond immediately to avoid further problems.
Eliminating delinquent debts might seem difficult but you can contact for more information on managing your debts. At , our Debt Management Plans are designed to assist you in paying off all your creditors through one convenient single monthly installment. Our credit counselors will help you eliminate your debt.
