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Credit Card Cut Off

Thursday, September 13, 2007

You must have heard such a phrase as "closing one's credit card account", but do you know that it has a twofold interpretation depending on the circumstances of canceling? Making a credit card deal and signing the contract, you have all the legal right to close the account, but if you do it at the wrong time it can cost you double.

The most important thing about canceling your credit card is to define the reason and purpose of doing it. You either want to close the card to additional future purchases or you have maxed it out and are seeking a better credit card deal. In both the cases, it is essential to eliminate all the balances that still show up on your account.

Not all credit card holders manage to finish faultless, though. Quite a number decides to stop using their credit card with still some default records on it. And it's not that they forget to pay off the last bill, but they hope that, in the course of time, if the bill is not so big, the creditor will give up and seize calling them.

You wish. You cannot really close your credit card account if there is a debt on it. You have some little balance and you just stop using your credit card and this card is reported closed. But you should know that the delinquencies still remain on your credit report for up to seven years. The old debt is the reason per se why the account cannot be actually closed, though they call it so.

Now, the most frequently asked question when a credit consumer decides to break off with the credit card company is "Will the company continue to send me bills and will they hand me over to collections if I don't pay?"

Well, it depends on your particular situation and, which is surprising, on the state you live in. As to your payment ability, the company will make a decision whether to discharge the debt or to sue you based on the status of the loan. If they recognize it as nonperforming they wouldn't persist collecting the outstanding debt.

This said, there may arise a question "What is a nonperforming debt?" It is a kind of credit card debt that is forbidden from collecting due to the statute of limitations assigned to your credit card deal.

Thus, as soon as your old debt reaches a certain time point, the debt collector is no longer allowed to sue you for the payment. Only after your debt goes beyond the statute of limitations, the account is declared closed.

If you are persecuted by a debt collector encroaching on your assets, you can legally accuse him of violating the Fair Debt Collection Practices Act.

No matter what intention you have, whether to dodge the responsibility of paying or follow the moral urge of settling the account, you need to know your State statute of limitations. Depending on the state, your debt may stay valid for a different period of time.

As long as your old debt is within the statute limitations, you still owe money to your creditor and your credit card account cannot be really closed.

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