If one fails to pay their credit card bills, the lenders will report the payments to the major consumer Credit bureaus like Experian, Equifax, and Trans Union. After 5 to 6 months, debts are discharged, but that does not mean that the debtor does not have to pay off the debts, it will remain like a derogatory item on the credit report and will cause a significant reduction on the credit score. At the very first instance of delinquency, there will be a direct call from the creditor, and then it goes to the collection agencies. The third party collectors are more likely to be aggressive in their collection process. The Fair Debt collection agencies make it a point to secure customer rights. If the cease and desist letter is already sent by the debtor the collection agencies will have to stop with all types of contacts with the debtor, until they receive any type of confrontation or permission. Depending on the state laws the creditor garnishes the wages, levy bank statements to take action to enforce its judgements.The debtor can file bankruptcy to prevent further action on enforcement.
If bankruptcy is filed it appears to remain on the credit report for nearly 10 long years from the date of filing. It will be difficult for people to counterbalance the negative impact of bankruptcy once they had filled for it. There will be no one who would take the risk of co-signing an unsecured loan in time of financial crisis.
In terms of the credit score, it is wise to have one single large account instead of number of small delinquent accounts. For any other program like debt settlement or debt consolidation, the opposite would be true. If the creditors are more in number the negotiation becomes more flexible, with only one creditor it is difficult as one or two creditors’ refusal to cooperate will defeat the plan as a whole.
Any kind of bankruptcy as well as foreclosure actions are viewed as derogatory items. It is difficult to compare the two as both have deadly consequences. Foreclosure action can prove to be expensive for the common people than bankruptcy. It is always better to consult an attorney before coming up with any conclusion as to which would prove to be the right option to choose and then work accordingly.