In Malaysia, we find that people have major issues with debt control. A lot of people are not paying even the minimal monthly payment required to keep their credit card running. No matter how damaging it is in the long-run, the truth is that you will continue being sucked in further into this almost unbeatable chaos. However at times, when the reasons may be genuine such as losing your job or a financial emergency for a family member at home, a credit card might be your only solace. Under such situations it is important to know what happens when you are not paying your credit card bills in time. You may have a general idea of what happens but you don’t know when and how things start happening. This read is aimed to help you understand the consequences you are about to face when you default your credit cards bills and especially in Malaysia.
So, let us take a look at how you will end up in matter of months, if you continue defaulting.
In The First Month
If you miss your credit card payment by a few days it should not be too bad for you since, it can happen to the most disciplined people. When you miss the payment by a month, the Credit Card Company or bank will give you a call, reminding that your payment is due. They will simply charge you a late fee over the interest on the outstanding amount. You will also be sent a note which will be also notifies to the CCRIS (Central Credit Reference Information System) which is your banking history with an outstanding record of a single month. It is time to pay up by this time since credit collection methods will get more abrasive and rigorous. You can also pay the minimal monthly payment required on your bills which varies depending on the amount due and your bank’s policies.
Between a Month to 2 Months
If you have not paid the bills by the second month and you cross your due date again you will start receiving written letters from the credit card provider or the bank. You may also get phone calls as a second reminder. Now you would owe the bank the previous total which includes the outstanding amount, the interest as well as the late charges along with new charges some more additional interest along with late charges for the second month.
There will be a new minimum monthly payment which will be required to pay, to return your credit card account to get your account back to normal. Try paying that at least. Also note that your CCRIS score will now show outstanding amount payments of two months which will now will have a negative effect on your bill. The bank may also block the usage of your card to avoid further charges and expenditure through the card.
If you are still unable to pay the amount, there are two ways of getting out of it by paying through a term loan or personal loan to pay your credit card bills in instalments at lower rates or shift your bills to another company with lower interests and easier amounts to be payable. But remember that you have to negotiate this with the bank and hence convince that you will pay up through the new payment option.
Between 2 months to 3 months
If you have still not managed to pay up or have not seeked another option you are going down the route of no return, or you are crazy because now you will end up in a major soup, regardless your viable reasons for not paying in due time. Not only will your credit card be blocked until you negotiate an amount to unblock it. You will also be labelled for bad debt and will be considered non-recoverable. A legal letter or a letter of demand will be sent to you which will now be more of a demand than a request and of course you will be hassled further by the company, requesting for your amount to be recovered.
If you still are unable to settle the debt or find a way to do so, you will need to contact AKPK. This is a debt management agency which might be able to getting rid of your debt.
Beyond 3 Months
After 3 months the bank may be required to use a debt collection agency to recover the amount. The collection agency is generally given a period of time to make their collections from the customer. You will not only be served legal notices but note that these agencies are by law not allowed to harass you or physically harm or even threaten you.
The Final Stage
If you still do not pay up to the debt agency the bank will now opt for legal proceedings. You are not only in a debt soup but it has been added with legal issues as well. You are not only summoned by the court but it will be recorded in the CTOS system. You can forget opting for any financial product from there on because no one will entertain you with your record.
Sounds scary!! Start making your payments. Take help from others or get a part-time job if needed or announce bankruptcy.
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