It happens to all of us at one time or another. You were on a vacation, did not have enough money or just simply forgot to make a payment (or two). There are three things that you must consider:
1. What is the effect on your credit score?
2. Will there be a penalty for a late payment?
3. Will the bank raise the interest rate on my credit card?
As a general rule, if you have always paid your credit card in full and on time, being late one time will have no effect on your credit score or credit rating. However, if you have a history of late payments, no payments, bounced cheques or paying less than the minimum amount due, you already have a reputation with the credit card company as a delinquent credit card holder. Missing or late payments will just continue to reduce your credit score. The only way to get back your old “good” score is to start making all of your minimum monthly payments on or before the date they are due. If you have any extra money, review your credit card statements and look for interest being charged and make the extra payment to those cards that charge the highest interest rate.
The computers of all credit card companies are programmed to charge a penalty if you are late in a payment. If you regularly pay your bill on time each month, consider calling the credit card company (the number is on the monthly statement) and explain what happened that caused you to be late in your payment and ask them to consider reversing the late fee. The person that you will be speaking to may be sympathetic to you and just might have the authority to reverse the late payment charge. Nothing ventured, nothing gained!
The credit card companies will rarely raise the interest rate on your credit card just because you were late on one payment. Being late on many payments or several payments in a short period of time will almost certainly downgrade your credit standing
Credit card companies set the interest rate on your credit card based on several factors:
There is the standard rate charged to the average cardholder
An introductory rate for new customers
The rate based on your credit score
The rate based on what the card offers you in points, rewards and/or bonuses
What other similar cards will charge you
You must realize that your credit card company wants to make a profit on you, but, they do not want to lose a good customer to a competitor. There is nothing wrong with phoning your credit card company and asking them to reduce your interest rate or allow you to transfer your card balance to a lower interest rate card. You should shop the competitors to see what is available from them and tell your credit card company what you found and see if they will match the competition.
You might find it advantageous to actually switch to the competitor if they offer a 6 or 12 month low introductory interest rage. But be careful of doing this as many people start running up their debt on the old credit card. Now you have solved one problem but created a much larger one by increasing your overall debt. Your purpose should be to lower your interest rate but continue to make the same payments so that you can pay off the total debt on all of your credit cards faster than before.
Can I Max Out My Credit Cards and Then Go Bankrupt
You could max out your credit cards and then go bankrupt, as long as you do not wish your bankruptcy to go smoothly. Your trustee is obligated to review your spending for the period immediately before you file the bankruptcy. As well, all of the creditors will, by computer, review your charges on credit cards or debits looking for increased spending in the period prior to the date you filed the assignment in bankruptcy. The normal review period is 90 days but his can go to one year (5 years if real estate is involved) if the creditors or trustee has any hint of wrongdoing. If you make a significant purchase or cash withdrawal just before filing your bankruptcy, this is considered to be an offence under the Bankruptcy and Insolvency Act. The trustee, a creditor or the Office of the Superintendent of Bankruptcy will file an Opposition to your discharge from bankruptcy. You also might be required to attend an examination under oath to explain what you did and why you did it. This will result in your bankruptcy taking longer to complete as you may be required to attend a court hearing to obtain your discharge from bankruptcy. As well, you will be likely required to pay to the trustee the amount of the purchase or cash advance that you took. The trustee, of course, distributes these funds to the creditors. In extreme circumstances, the matter could be turned over to the police for investigation which may result in criminal charges of fraud. A finding of fraud results in the debt involved surviving both a bankruptcy or a proposal.
And all you wanted to do was buy that 60” TV or send money to help your family who are in a poor financial situation. Not a good idea.
So to answer your question, Can I Max Out My Credit Cards and Then Go Bankrupt? The answer is NO.
It is important to think about your future housing needs as you get older. There are several different kinds of seniors’ housing so you can find out what types of home support are available in your neighbourhood. At the same time, consider your current home to see if there are things you can do to make it easier and safer, as you get older. If you have a disability, you might be eligible for government assistance to pay for home renovations. You should also find out what kind of services are available in your community such as home support—you may want to ask your family doctor and/or someone you trust for any advice or guidance regarding support services. Researching and understanding your options will help you make future decisions about your housing. There are several different types of seniors housing and access to subsidized units for low-income seniors. You will have the option between independent living, retirement homes and assisted living, nursing homes or long-term care.You should compare costs and services offered in each setting.