What Can Happen if You Owe Money to a Bank
Saturday, October 17, 2020, 6:00 PM | Leave Comment
What can happen if you fail to pay back your credit card debt?
This is the question that is bothering many consumers who have lost their jobs or are on a salary cut as the recession continues to wreak havoc.
-
Raising Interest Rate
There are a lot of factors that go into deciding on raising of the interest rate. First of all, it’s very important to have some room to be flexible and be able to keep the bank happy. Of course, banks have to make a living as well, and they have to be able to cover their costs. So if you can work out a way for them to do this without having too much trouble with it, then you’re going to get some help.
A good thing about this current move is that it allows you to actually get some of that money back from your debt. This is a good thing to watch for as well. This is because some lenders may be willing to work with you on an interest rate that will be lower than what you would have gotten it at. This can allow you to pay off your debts in order to keep you out of debt in the future.
The thing to watch for though is that sometimes you’ll have to deal with a lowering of the interest rate for your home loan as well. If you have bad credit in your past then there may be some other lenders that may not be so willing to work with you because of your past record.
But, if you have a lot of credit in place then you can use that to your advantage and raise the interest rate on the loan to something you can actually afford. You can also look into applying for a refinance of your existing mortgage, which can get you a better rate than what you could find anywhere else. You can also refinance your home equity loan as well.
-
Lose Your Credit Card Privileges
What can happen if you fail to pay back your credit card debt? Well, you are going to find that your credit record is affected and it is harder for you to obtain future credit lines from lenders.
Your credit score is going to be lower than normal and this can take years to get back to where it used to be. There are some steps that you can take to repair your score but they include paying off your credit card bills and getting your credit cards with a new balance and then adding them to your savings account. This is a process that takes some time and that will not affect your job or your income.
-
You Could Lose Your Job
If your job were to catch wind that you are dealing with this, you could potentially lose your job as well. Making it even hard to get payments made and make up for the debt that you owe.
-
Wage Garnishment
You may have heard the term ‘garnishing wages’ used in court as a reference to wage garnishment, but what exactly is garnishing wages? In its simplest terms, it simply means that the court is using the threat of wage garnishment as a way to collect payments from an individual.
The fact is that the courts do not make these types of court orders all the time. A judge does not usually grant such orders unless they have exhausted all other methods of collecting payment from an individual. Some of these orders have to do with child support and other forms of financial support that an individual may be receiving.
If you are already responsible for repaying any outstanding debt that you owe to creditors, you are not a candidate for wage garnishment. However, even if you are not in this category, you still need to protect yourself against the threat of this practice. There are many different options available to you. One option that you may want to consider is filing a petition with the court itself.
Garnishments do not have to be applied to each creditor that you owe money to. It is perfectly acceptable for one creditor to be garnished while another does not. Even if you have numerous creditors, you can still be garnished.
This all can depend on where you live as well. A quick search for “garnish wages in Canada” can give you more detail depending on where you are located.
-
Tips To Resolve It
Debt settlement is when you try to get all of your unsecured debt reduced in a lump sum so that you only owe the principal. You will pay a lower interest rate and you may also be allowed to skip making payments for several years. This is not good for your credit rating, but it will lower your overall debt significantly.
A debt consolidation loan is when you apply for one loan to pay off your credit card debt, other loans, and personal loans. These types of loans have a very high-interest rate and you have to pay it back in a few years.
The last option is a debt consolidation loan because you will only have to deal with one lender for your credit card debts and the other lenders will give you a loan for the debt that you currently have and the balance of all of your unsecured debts. This option is more suited for those with multiple credit card debts and no employment.
Debt consolidation loans, however, will impact your income. This type of loan is used to pay off all of your credit card debt, which means that you will not have any disposable income until your consolidation loan is paid off. The loan is usually secured by your house or car, so it may be harder for you to get financing. However, if you are able to get some type of loan or financing, this can be very beneficial because it helps you keep up with your debt.
