From CBS News · Angelica Leicht · · 2m
Missing a debt payment: what happens next
A missed payment can trigger fees and credit damage, but acting fast limits the harm and preserves your options.
In brief
A missed payment can trigger fees and credit damage, but acting fast limits the harm and preserves your options. Missed debt payments trigger escalating consequences from late fees to collections, but contacting lenders quickly and addressing underlying affordability problems can limit damage. Originally reported by…
Why people miss payments
Missed payments often stem from having more bills than money available, not overspending. Elevated borrowing costs and household budget strain make it harder for even reliable borrowers to prioritize all obligations.
Borrowers in crisis
According to a recent study from Freedom Debt Relief, nearly one-third of surveyed consumers with at least ten thousand dollars in unsecured debt had withdrawn money from their retirement savings to pay down balances in…
Late fees kick in
A missed payment can trigger a late fee once any applicable grace period expires.Credit card issuers, personal loan lenders and other creditors have different policies, so amounts and timing vary.
Credit damage at thirty days
A payment generally isn't reported as late to major credit bureaus until it's at least thirty days past due.
Interest rates rise
A missed payment could result in additional interest charges or loss of a promotional interest rate.
Account goes to collections
If the account remains delinquent, the lender may eventually charge off the debt or transfer it to a collection agency.
Contact your lender immediately
Don't wait for collection calls. Contact your lender as soon as you realize you've missed a payment. You may qualify for a late-fee waiver, temporary payment extension, hardship program, reduced payments or lower interest rates.
Address the underlying problem
If the missed payment reflects a larger affordability problem, catching up once may not be enough.
Prevent the next missed payment
Once the immediate issue is resolved, set up payment reminders or automatic minimum payments. Adjusting payment due dates to align with paychecks may help. Building even a modest emergency cushion provides protection against unexpected expenses.
The main idea
Missed debt payments trigger escalating consequences from late fees to collections, but contacting lenders quickly and addressing underlying affordability problems can limit damage.
