Open accounts
Open credit card accounts are accounts where you can still make purchases.
Missing your first payment
Missing a payment can feel scary. Here's what actually happens.
Your account stays open. You'll be charged a late fee and extra interest. That's it for now — you still have options.
Missing more payments
Things change the longer you wait. Around 60 days, the card company may stop letting you make new purchases. Around 90 to 120 days, most companies will close the account.
Closed accounts
If you've missed a number of payments, the credit card company may close your account. This means that you can't make any more purchases on the account.
You still owe the money, and interest and late fees can keep adding up.
Closed but not in collections — the "grey zone"
Many people assume a closed account means the debt is in collections. That's not always true.
Your account can be closed while the original credit card company still owns the debt. They can still report late payments to the credit reporting agencies and keep charging interest and fees. Your balance can keep growing even after the account closes.
Charge-off
A charge-off happens when the credit card company decides the debt is unlikely to be paid, usually when the debt is about 180 days late. A charge-off does serious damage to your credit report, but it does not erase your debt. You still owe the money.
You still have options. You can try to settle for less than the full amount. This can work in your favor, since the credit card company may be planning to sell your debt to a debt buyer for pennies on the dollar anyway.
Debt sold to a debt buyer
After a charge-off, many credit card companies sell the debt to a debt buyer — often for a fraction of what you owe. Debt buyers may aggressively try to collect, including taking you to court.
You have rights. A law called the Fair Debt Collection Practices Act protects you from false statements and harassment.
And since debt buyers paid so little for your debt, you may be able to negotiate a real discount on what you owe.
Bottom line
No matter where you are with your credit card debt, you have options. Debt Help Illinois can walk you through the pros and cons of each option and help you decide what's best for your situation.