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5 things to know if your credit card debt is in collections
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Credit card debt has become a pressing issue for millions of Americans, with recent data showing a troubling surge in maxed-out accounts and delinquent payments. And while it’s easy to fall into credit card debt in any economic environment, the current high-rate landscape has only exacerbated the problem, making it more challenging for cardholders to keep up with their payments.
With the Federal Reserve keeping rates high to combat inflation, credit card APRs have been climbing, and are now nearing record highs. In turn, cardholders who are carrying balances are accruing interest at an alarming rate, making it increasingly difficult to chip away at their principal debt.
If you’ve been struggling with credit card debt and have accounts that have gone into collections, it’s crucial to take action sooner rather than later. Ignoring the problem won’t make it go away and can lead to severe long-term consequences for your financial health. By fully understanding your situation, though, you may be better prepared to regain control of your finances.
Want to get rid of your credit card debt now? Learn more about your top debt relief options here.
5 things to know if your credit card debt is in collections
Here are a few key things you should know if your credit card debt is in collections:
Fees and charges are likely still accruing
When your credit card debt is in collections, it’s easy to assume that the balance has been frozen. However, this is generally not the case. Many collection agencies continue to add interest, late fees and other charges to the outstanding balance. This means that even if you’re not actively using the card, your debt could still be growing.
That’s why it’s essential to request a detailed breakdown of your current balance from the collection agency. This will help you understand exactly what you owe and how much of it is the original debt versus added fees and interest — which can help you make decisions about how to proceed with repayment or negotiations.
Don’t let the fees continue to accrue. Take steps to get rid of your high-rate credit card debt today.
Your credit score is taking a serious hit
Having a credit card account in collections can have a devastating impact on your credit score. A collection account is considered a major negative item on your credit report and can remain there for up to seven years from the date of the first missed payment that led to the collection.
The exact impact on your score can vary, but it’s not uncommon for a collection account to cause a drop of 100 points or more. This significant decrease can affect your ability to secure new credit, rent an apartment or even land certain jobs. It can also result in higher interest rates on any future loans or credit cards you might qualify for.
More serious repercussions could be on the horizon
While having your debt in collections is already a serious situation, it’s important to understand that things could escalate further if left unaddressed. Collection agencies have several tools at their disposal to recover the debt, and one of the most serious is pursuing legal action against you.
If a collection agency decides to sue you for the unpaid debt, they can obtain a court judgment. This judgment gives them additional powers to collect the debt, including wage garnishment, bank account levies or even property liens, all of which can have severe and long-lasting consequences on your financial stability.
You have rights in this situation
It’s important to remember that you also have rights in this situation. The Fair Debt Collection Practices Act (FDCPA) provides consumers with protections against abusive, unfair or deceptive practices by debt collectors. Some key rights under the FDCPA include:
- The right to request debt verification
- Protection from harassment
- Control over communication
- Honest representation
Understanding and asserting these rights can help you navigate the collection process more effectively and protect yourself from unfair practices.
There are solutions to consider
While dealing with credit card debt in collections can feel overwhelming, there are several potential solutions to consider, including credit card debt forgiveness, also known as debt settlement. This option involves negotiating with the collection agency to pay less than the full amount owed.
Credit card debt settlement can be particularly effective for accounts in collections, as creditors may be willing to accept a lump sum payment for less than the full balance rather than risk receiving nothing. However, it’s important to get any settlement agreement in writing and understand the potential tax implications of forgiven debt.
Some collection agencies may also be willing to set up a payment plan that allows you to pay off the debt over time. This can make the debt more manageable and help you avoid more severe consequences.
The bottom line
Having credit card debt in collections is a serious financial situation, but it’s not an insurmountable one. By understanding the ongoing impact on your finances, knowing your rights and exploring available solutions, you can take steps toward resolving your debt and rebuilding your financial health. But the key is to take action rather than ignoring the problem, so create a plan of action as soon as possible and then stick to it.
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Jennifer Lawrence and Malala Yousafzai shed light on Afghan women’s fight for freedom in new film
A powerful new documentary is exposing the harsh realities faced by women in Afghanistan under Taliban rule. The film, “Bread and Roses,” is directed by Afghan filmmaker Sahra Mani, produced by Oscar winner Jennifer Lawrence and executive produced by Nobel laureate Malala Yousafzai.
Mani details the grim reality faced by millions of women in Afghanistan under Taliban rule, which drew the attention of Lawrence in 2021.
“My first reaction when watching that was to do what the Taliban did not want us to do, which was give access and facilities to the people on the ground to capture what was happening on the ground in real-time,” she said. “Because obviously the Taliban flourishes in secrecy.”
Some of the strict limitations imposed on women in Afghanistan under Taliban rule include prohibiting women from working, pursuing education, or even leaving their homes without a male escort. They are also barred from singing, playing music, making films, and, more recently, dining at restaurants or purchasing food in public.
Lawrence and her producing partner, Justine Ciarrocchi, set out to reveal these realities in Afghanistan through the eyes of Afghan women. They enlisted Mani to direct the documentary and Yousafzai joined the project as an executive producer to help amplify its message.
When asked why the Taliban opposes women’s education, Yousafzai said, “We have been trying to figure out an answer to that for the past 30 years…I cannot find any explanation that justifies it to me. How can you stop a girl from her school? They come up with these excuses that it’s culture, it’s religion. There is no culture, excuse. The true representatives of that culture are the Afghan women and girls that we’ve seen in the documentary.”
The documentary follows three Afghan women who secretly filmed their protests. Mani said she wanted to capture the intimate moment of their life and give people an opportunity to see what life is like for Afghan woman under a Taliban dictatorship. But she also wanted to encourage by highlighting their strength.
It’s a reality that Lawrence said would be difficult to experience.
“I can’t imagine not being able to take a taxi or being able to listen to music. I can’t imagine if just the sound of my voice was illegal,” she said.
Lawrence, known for her activism, acknowledged the dangers of speaking out but said the stakes were too high to stay silent.
“There’s 20 million women whose lives are in danger,” she said.
Yousafzai, who survived a Taliban attack in 2012, reflected on the ongoing fight for women’s rights.
“What really shook me was the fact that people stand with you once you have survived, but we don’t look at people who are still under a big threat,” she said. “Let’s share our solidarity with them.”
