Im doing a report on Credit Card Debt and there isnt much about the direct effects of being in credit card debt.
I know bankruptcy is an effect but what else can happen?
depending if your on time with your monthly payments or not. your credit score is effected, your interest rates go higher, your chances of getting a good deal on a car or house go down, etc
There is really an unlimited number of effects that come from having credit card debt.
From having depression and being overwhelmed to being restrained because you don't have any freedom that comes with having disposable income. Some face contast bombardment from harassing creditors. and yes, some face bankruptcy.
Your credit report will reflect the numbers of debt. Therefore, you're less likely to obtain new credit. you can't get a loan for a car or a mortgage.
You should probably have categories to organize your paper, perhaps including feelings (maybe use a synonym) and money figures, like credit status and net worth.
It seems as if more and more school-related assignments are including debt and money as topics, which will help make this next generation more educated and hopefully responsible with their finances.
Good luck.
That is really a very broad question, so I will focus only on the effects that bad credit card debt has on your credit file and some of the potential consequences. by bad debt I mean the outstanding account balance on which even the minimum payments have not been made.
There are stages in the delinquency of credit card debt. If even the minimum payment has not been made for up to 90 days, the account will be still at the card issuing bank. It will be reported in your credit file simply as a late payment and it will be specified how late (30, 60 or 90 days). Your credit worthiness is slightly damaged and your credit score will drop a little bit.
If no payments have been made for more than 90 days, the account will be "charged-off". This refers to a debt, declared to be uncollectible and removed from the bank's balance sheet. Once charged-off, the account is sent to a collection agency and reported to the credit bureaus as a charged-off account. This is a lot more damaging than being late on a payment and your score will drop substantially.
The collection agency usually has the account for no longer than 60-90 days and their settlement parameters are very rigid. Typically they will not accept a settlement for an amount smaller than 80%-90% of the outstanding balance (including interest and other financial charges).
After 60-90 days, the bank will recall the account from the collection agency, place it in a pool of charged-off accounts, that have already gone through the same cycle, and sell it to a debt buyer. a typical bank sells such accounts quarterly.
Once a debt buyer gets the account, they become the new creditor and can report the account again to the credit bureaus. So 1 account can generate several derogatory notes in your credit file, each one further damaging your score.
If it remains unpaid, the debt buyer can and will sell the account to another debt buyer and the story will repeat itself.
The earlier in this cycle the account is paid, the better for the credit history. It will be updated as a "paid collection" account, which is a great deal better than showing as a collection account. Yet, it will take time for the credit score to get back to where it was before the delinquency.
There is a lot more to be said, but I don't think I can cover it all here.
You can review for your research the Fair Credit Reporting Act.
http://www.ftc.gov/os/statutes/031224fcr…
What are the effects of credit card debt?
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