How Do Apartments Verify Income?

Blond girl at computer with phone, looking up how apartments verify rentYou’ve scoured the internet to find the perfect apartment, wowed the socks off your future landlord, and picked the perfect color to accent the cabinets in your new kitchen. All that’s standing in your way is navigating the rental application and all the details it demands, including your income. Many leases, especially with larger apartment complexes, have some sort of income requirement (likely 2 to 3 times your rent). But how do landlords actually verify your income during this crucial process?

In addition to your credit score, renter’s history, and a few other variables, your income is a key component of your candidacy for an apartment. A good rule of thumb is to search for an apartment that costs about 30% of your income. Be careful though – some leases require more than this, or a higher security deposit.

The first thing you can do is be prepared with 3 to 6 months of current pay stubs and/or bank statements. For freelancers, bringing along a few years’ of IRS-approved tax returns is recommended in addition to bank statements. Students should bring their loan disbursement schedule.

Landlords will probably ask you to list your employer’s contact information so they can verify your income and date of hire. They might also run a credit check to gain insight into your financial health. Some landlords work with outside organizations to run employment checks and verify income.

Bottom line? Be honest. Don’t waste you or the landlord’s time if you don’t meet the income requirements up front. Some may be willing to work with you if you don’t, but avoid getting attached to a place if you don’t think you’ll be able to afford it. Tell him or her up front to establish a trusting relationship with your potential future landlord.

Now that you’re in-the-know, you can prepare your information ahead of time to speed up the apartment application and approval process. Find your next apartment on to get started today!


Understanding Derogatory Marks on your Credit Report

  • Raise Credit Score

A derogatory mark can remain on your credit report for up to 10 years and cause a lot of damage to your credit score. But what exactly is a derogatory mark (also known as a negative mark or derogatory account) and how can it affect your credit score, and can it be removed?

What is a Derogatory Mark on Your Credit Report?

A derogatory mark is a negative mark that appears on your credit report following a financial mishap. It generally refers to any adverse outcome that has a long-lasting impact on your score, which means it includes bankruptcy and missed payments, but not hard inquiries.

Derogatory marks can appear on your credit report via one of two ways:

  • Reported Information: Lenders send information to credit reporting agencies and this information is used to build your credit report and calculate your credit score. It includes all data pertaining to your payment history, including derogatory marks from collection accounts and late payments.
  • Public Records: A credit bureau can add information to your credit report that is public record. This tends to be very damaging and can last for up to 10 years. It includes bankruptcy filings and tax liens, as well as civil judgments.

The many things that can cause derogatory marks include:

  • Miss a payment (can include a student loan, credit card, or any other debt).
  • Allow an account to enter collections or to be charged-off.
  • Settle your debt via a debt settlement company.
  • File for bankruptcy.
  • Your home is foreclosed.
  • You have unpaid tax debts.
  • You owe a debt through the courts.

How Derogatory Items Affect Your Credit

The way that a derogatory mark impacts your credit will depend on a number of factors, including your current credit score and credit history. If you have a bad credit score, the reduction may be minimal; if you have a good score it could remove up 150 points from your total.

This may not sound like much when you consider credit scores run from 300 to 850, but 150 is enough to send a previously “Exceptional” borrower into the “Fair” range, bypassing “Very Good” and “Good” on the way and greatly reducing their chances of securing low-interest loans.

You won’t see as big of a drop if your score is already low, but you could easily become one of the 16% whose scores are in the lowest possible “Very Poor” range, at which point you’ll be rejected for nearly all types of loans and credit cards.

Of course, it also depends on the type of derogatory mark. Bankruptcy, for instance, will impact your score much more than a late payment.

Open and Closed Derogatory Marks

There are two main types of derogatory mark: Open and Closed. These refer to the status of the account. An account that is in collections, for instance, will be classed as “Closed”, as is the case with ones that have been charged-off. An account that continues to receive monthly payments is classed as Open.

Both Open and Closed derogatory marks can seriously damage your credit score.

How Long Does It Take to Get a Derogatory Mark Removed?

There are a few ways you can remove derogatory marks quickly and with relatively minimal fuss. However, in most cases, they will remain for the term, which can vary depending on the type of mark. 

  • Bankruptcy: Whether you file for Chapter 7 or Chapter 13 will dictate whether the mark remains for 7 or 10 years.
  • Foreclosure: If you fail to make mortgage payments then your house may be repossessed, with the derogatory mark remaining for 7 years from the date of foreclosure.
  • Short Sale: A short sale can appear as a settlement or charge-off and will remain on your credit report for 7 years.
  • Collections: A collection will show for 7 years plus an additional 6-months from the date it was due. This may be true even if you clear the account in that time, although this isn’t always the case.
  • Tax Liens: Will remain for 7 years from the date they were filed, providing they have been paid.
  • Judgments: Both paid and unpaid judgments typically remain for 7 years, but it depends on the statute of limitations in your state of residence and on whether or not the judgment has been renewed.

What are the Permanent Effects?

Bankruptcy is one of the most damaging derogatory marks you can have, so let’s use that as an example. The average American credit score is around 700 (based on the latest FICO Score) and based on this score, bankruptcy can reduce it by between 130 and 150 points.

That’s a big hit to take in one go, especially if you have additional problems coming your way in the near future. However, once those problems have been dealt with, your score will gradually improve. There are ways that you can expedite this process and improve your credit score, but regardless of whether you employ a credit repair process or not, the effect of that bankruptcy will gradually reduce over time.

Once the 7- or 10-year period has elapsed, it will disappear completely and will no longer influence your credit report. There’s a good chance your credit utilization score will be low, as high-limit, low-balance credit cards are not exactly easy to come by during bankruptcy, so you’ll need to work on improving your score. But the worst of the process will be over and the effects of that derogatory mark will no longer be felt.

How to Avoid Derogatory Marks on your Credit Report

Everyone is at risk of getting a derogatory mark because no one is infallible. If you have active accounts, there’s always a chance that you will miss a payment or two, triggering a domino effect that ultimately results in a plummeting credit score and a litany of negative marks.

Keep your credit score strong and your credit report positive by following these simple rules:

  1. Be Aware of Your Credit Reports: Check with all credit bureaus at least once a year. You are legally entitled to a free credit report from each one every year and there are multiple free credit report services that can keep you informed all year long.
  2. Follow Through: Contact doctors and hospitals after appointments to make sure there is no remaining balance. As discussed in our guide to Medical Debt and Your Credit Score, medical bills are not added to your credit report unless they enter collections. Some debtors only learn about unpaid medical bills when they receive a derogatory mark or a demand from a debt collector. 
  3. Pay All Debts: Don’t assume you have gotten away with debt just because it doesn’t show on your credit report. It may appear eventually and if you don’t make payments it could enter collections. Pay all debts or at least learn more about them to better understand your options.
  4. Make All Payments: Every monthly payment has to be made on time. The longer you delay, the more damage it will do to your credit score and the longer it will take you to recover and repair your credit.
  5. Use Debt Relief: If your debts are too high, consider debt management, debt consolidation or even debt settlement, but always read about them beforehand and make sure you’re aware of the pros and cons before you commit.

Strategies to Remove Derogatory Entries on your Credit Report

Contrary to what you might have been promised elsewhere, there is no sure-fire way to remove derogatory marks from your credit report if they are accurate. There are companies that promise to do this, but the vast majority are outright scams seeking to sell you on a service that doesn’t exist while the rest offer risky and immoral strategies such as buying tradelines.

These scams prey on the desperate and make a killing by exploiting the debt relief industry. Stay clear of them and trust your instincts—if it sounds too good to be true…well, you know the rest.

Check your Credit Report

Credit reporting agencies aren’t as reliable and flawless as you might think, far from it. They can, and often do make mistakes. An FTC study found that 1 in 4 consumers has an error on their report that is severe enough to impact their score. 20% of these have their reports fixed after filing a dispute with the credit bureau responsible; 80% experience modification of some kind.

The first step in any credit repair process, therefore, is to check your credit report and become acquainted with the specifics. Not only will this allow you to identify and deal with fraud and errors, but it will also ensure you’re fully prepared to tackle your financial issues head-on.

Right the Wrongs

If your credit score has dropped as a result of several derogatory marks, it’s fair to say that you didn’t have control over your finances. You need to change that going forward:

  • Create a list of all outgoings and incomings.
  • Calculate your debt-to-income ratio (DTI).
  • If your DTI is high, acquire a debt consolidation loan or refinance.
  • Start budgeting and making sacrifices.
  • Prepare some emergency funds to cover you in the future.

Rebuild Credit

Unsecured credit card debt and personal loans probably got you into this mess in the first place and should be avoided. However, there are a few forms of credit you can use to rebuild your score without taking a big hit in the process and without being subjected to countless refusals and high-interest rates:

  • Secured Credit Card: A card that is “Secured” against a cash sum. It’s like a phonecard—you place some money on it and then use the card to spend that money. Every month your score will gradually improve and you’ll have a clean, positive credit account to your name.
  • Lending Circles: We wrote an extensive guide to lending circles here, discussing how these programs can help you to quickly and safely build credit, without acquiring costly interest rates.
  • Store Cards: A store card is basically a credit card with a high-interest rate and a ton of perks. These cards can be dangerous if you’re impulsive and have a history of running high credit card bills, but if you’re relatively responsible and have every intention of clearing your monthly balance, they can be useful. They’ll give you an account you can use to build credit and will provide you with additional features and perks. Keep the limit low to avoid temptation and don’t spend more than you can afford to repay. 

Don’t Rush

Credit repair takes time and is not something you should rush into. Doing so could lead to regrettable and costly mistakes, such as opening new accounts you can’t afford or committing to a debt relief program that damages your score. It’s important to take your time.

Wait for 7 to 10 Years

After 7 to 10 years, the derogatory mark will disappear completely, but after just a few years you’ll start to notice its effects much less. From that point on you can begin to rebuild your credit so that when the derogatory mark finally clears, your score is in “Good” or “Very Good” standing.

Conclusion: Derogatory but Not Devastating

Derogatory marks are negative, there’s no denying that, and they can do some serious damage to your credit report. However, all this damage can be reversed with a little patience and perseverance and you can still have a strong credit report even with the odd negative mark.

So, don’t despair if you’re hit with a derogatory mark—stay cool, learn the cause, look at the solutions, and do all you can to avoid additional marks landing on your report.


Credit Card Debt and How to Fix It

  • Credit Card Debt

We’re living in a throwaway society hellbent on spending money we don’t have for things we rarely need, and this attitude has led to a lifetime of debt for millions of Americans. Credit cards are at the epicenter of this issue and have contributed billions of dollars to America’s rapidly escalating debt crisis.

The average credit card debt is between $5,500 and $8,000 and every year millions of Americans are crippled financially as a result of this debt. With that in mind, what can the average debtor do to clear credit card debt and get back on their feet?

How Credit Card Debt Works

190 million Americans have a credit card and the majority have at least 3. For many, a credit card is a rite of passage, a plastic permit that welcomes them into adulthood and all the responsibilities and obligations that go with it. But while most Americans have them, very few actually understand how they work.

  • Why have I paid $5,000 of interest on a debt of $20,000 when the interest rate is less than 20%?
  • Why am I being charged small amounts of interest when I clear my card every month?
  • Why is my debt high but my interest low?

These are very basic and common questions relating to credit card debt and we’ll answer them all in this guide.

How is Credit Card Interest Generated?

First, let’s tackle the big one, the question on the minds of many new credit card users but one that most are too embarrassed to ask: How does credit card interest work?

All interest is calculated as an annual percentage rate, known as an APR. This rate makes it easier for a user to compare cards, but the number itself isn’t exactly clear and obvious. After all, if you’re being charged a 20% annual rate on a $10,000 debt, you should pay just $2,000, but most credit cards charge much more.

That’s because the interest compounds and is calculated every single day. As an example, if you have an interest rate of 15% then you’re being charged .041% every day. If you have a balance of $10,000 on day 1, the interest will be added, and the balance will grow to $10,004.10. The 0.41% charged at the end of day 2 is levied against the new balance and this continues every day, which means the balance will have grown by $130 by the end of the month.

The greater your balance, the higher the interest rate and the faster your balance will grow. 

This is also why some users may find themselves paying very little interest despite having a large balance. If your balance is $20,000, but you repay $10,000 in week 1, add $5,000 in week 2, pay $15,000 in week 3, and add $20,000 in week 4, you have the same balance at the end of the month, but it hasn’t had 30 days to compound on the full $20,000.

That leaves one question: Why am I being charged interest if I repay my balance?

This is often the result of cash withdrawals. Not only do some credit card companies charge you a flat fee for making cash withdrawals, but they also charge high-interest rates, often up to 27%. Cash advance fees and cash withdrawal fees are levied when you withdraw money from your credit card using an ATM, but they are also charged on payments made in casinos, lottery ticket purchases, money orders, and some foreign currency purchases.

How Much Credit Card Debt is too Much?

There is no upper limit—it all depends on how much you earn and how comfortable you are with that debt. $10,000 is an insurmountable sum to someone who earns $2,000 a month and has a family of four to feed, but it’s insignificant to someone living alone and earning a 7-figure salary.

To estimate how much is too much for your financial situation, you can use the debt-to-income ratio. This calculates your total monthly income and compares it to your combined monthly payments. As an example:

Monthly Income:

  • Salary = $4,000 
  • Bonuses = $500
  • Investments = $500 

Monthly Debt Payments:

  • Credit Card 1 = $500
  • Credit Card 2 = $250
  • Credit Card 3 = $250
  • Mortgage = $1,000

Total Debt-to-Income Ratio = 40% ($2,000 is 40% of $5,000)

This ratio won’t directly impact your credit score, but it’s used by mortgage lenders and other lenders to determine your creditworthiness.

The ideal score is less than 20%, while anything above 50% is considered high. Some lenders will refuse anyone with a debt-to-income ratio greater than 43%, others set the bar much lower. 

This ratio is just as important for assessing your own financial situation because the higher it climbs, the closer you get to missing monthly payments and filing for bankruptcy. Many debtors struggle because they bury their heads in the sand—acquiring more debt even though their income remains the same—and never truly understand just how deep into the red they are until it’s too late.

How Does Credit Card Debt Affect Your Credit Score?

There are several ways that credit card debt can impact your credit score, some more damaging than others:

  • Applications: Every time you apply for a new loan or credit card, you run the risk of initiating a hard inquiry, which can reduce your FICO Score by as much as 5 points. Credit scoring agencies allow for something known as “Rate Shopping”, whereby all applications for the same credit type are bundled into the same inquiry if they occur within a fixed period. However, this doesn’t apply to credit cards and each one can trigger a hard inquiry.
  • New Accounts: Your score suffers every time you open a new account. 10% of your score is based on new credit accounts while a further 15% is based on credit length. A new credit card will directly impact the former and indirectly affect the latter.
  • Payment History: The more cards you have, the greater your risk of missing payments. Payment history is the single most important part of your credit score, accounting for more than a third of your total score, and this drops every time you miss a payment.
  • Credit Utilization: Your credit utilization score accounts for 30% of your credit score and compares all available credit against total accumulated debt. If you have two credit cards with limits of $10,000 each and balances of $9,000, your credit utilization will be 90%, which is poor. You can improve this score by clearing debt, increasing credit limits, and keeping cleared cards active.
  • Credit Types: 10% of your score is based on credit variety. If you only have credit cards, this aspect will suffer. 

Average Credit Card Debt in the US

The average credit card debt is somewhere between $5,000 and $6,000 per user and $10,000 per household, while the average user holds between 2 and 4 credit cards. The problem with the average credit card debt is that every survey, site, and credit agency arrives at a different figure.

According to a leading and highly quotable financial site, the average credit card debt is $8,000 per user and $16,000 per household. However, if you ask Experian, the figure is closer to $6,500 per user and $11,000 per household, and if you ask the Federal Reserve it’s a fraction under $5,700.

It’s all pretty confusing, to say the least, but that’s because everyone gets their data from different places. Financial sites use limited surveys that ask several hundred or several thousand consumers and then extrapolate. But ask yourself this, if a random person approached you with a clipboard and asked you how much credit card debt you have, would you be honest with them?

Probably not. And even if you were, just because you and 200 people have $20,000 worth of credit card debt doesn’t mean that everyone else in the country has the same.

Other average credit card debt statistics are built using credit report data. This is a little more reliable, but it’s not without its flaws. The average person considers credit card debt to be an unpaid, rolling balance, as opposed to one that is accumulated on day 1 and then cleared on day 30. Credit reports don’t differentiate between the two, which skews the results somewhat.

Needless to say, it’s hard to arrive at an exact figure for average credit card debt in the United States, but we can say with relative certainty that it’s one of the highest averages in the developed world and is enough to cause serious concern for every single debtor.

Consequences of Missing Credit Card Payments

What happens if you miss a payment? How long do you have before it hits your credit report and how costly will it be?

Let’s find out.

What Happens if you Miss a Single Credit Card Payment?

In the first instance, you will be charged a late fee, which can be around $30 to $40 and is charged even if you’re late by a single day. You may also incur a penalty rate, which typically maxes out at 29.99% APR, nearly 10% higher than the average credit card APR.

If you miss your payment by 30 days, it will show on your credit report as a derogatory mark, reducing your score by up to 100 points. The exact reduction will depend on how high your score is to begin with, but it’s enough to significantly reduce your creditworthiness at any level.

If you have missed a payment or are expecting to do so, contact your credit card company as soon as you can and discuss your options with them.

What Happens When You Stop Paying a Credit Card?

After a few months of missed payments, your account may enter collections. Debt collection agencies buy bulk debts of similar ages and types and then contact the borrowers to seek repayment.

They purchase debts cheaply, so their profit margin is huge, and they’ll often request a single, lump-sum settlement or several large monthly payments. They can contact friends, family, and even your place of work to track you down and they can also offer you settlement amounts and repayment plans. The agency may also sell the debt to another company, after which the process will repeat. 

However, they can’t divulge information to anyone but the debtor and there are strict rules governing what they are allowed to say and do. 

If you refuse to agree on a settlement or a repayment plan, they may sue you, although this is rare. They can also continue to contact you even after the statute of limitations has passed and if you agree to pay them then the debt may become valid again.

How Long Does Unpaid Credit Card Debt Stay on your Credit Report?

A credit card debt can remain on your credit report for 7 years from the date that it was charged-off. A charge-off means that the debt was officially declared as a loss by the creditor. The closer you get to that 7-year period, the less of an impact it will have on your score, and as soon as those 7 years are up then it will disappear.

Methods for Paying Off Credit Card Debt

As scary as your credit card balance may seem and as crippling as the debt may feel, it’s actually one of the more manageable debts and there are multiple debt relief options and pay off strategies. 

It sounds crazy when you consider how high the average credit card debt is in the United States, but it’s worth noting that this debt is unsecured, creditors are quick to sell it to debt collectors, and if you die or declare bankruptcy, they’re forced to form a queue behind pretty much every other type of debt.

Pay Off Strategies

Payoff strategies should always be considered before you look at debt management, debt settlement or a debt consolidation loan. They won’t reduce your credit score, charge significant fees or require you to obtain additional lines of credit or personal loans.

There are two main pay off strategies:

  • Debt Snowball Method: List your credit card debts from the smallest balance to the biggest and then focus your attention on clearing debts from the first to the last.
  • Debt Avalanche Method: List all debts based on interest rates, from highest to lowest, and then work your way down the list.

These methods require you to make extra payments while continuing to meet your monthly payments. This is easier said than done, but there are a few tips that can help you out:

  • Spend less and budget more.
  • Stop wasting money on luxuries.
  • Use cash from unexpected windfalls.
  • Sell unwanted items online or in a garage sale.
  • Ask for a promotion or raise.
  • Take on a part-time job.
  • Use your skills to enter the gig economy.

Debt Settlement

The debt settlement process was made for credit card debt and it works best when you have a lot of debt and derogatory marks.

As discussed already, your credit card company won’t wait around forever. If you don’t meet your obligations, they’ll give you a few months, report to the credit bureaus, and then sell your debt to a debt collector for cents on the dollar. 

This means that both the creditor and collector are inclined to settle your debt for much less, as it’s still more than they would get by selling or discharging it. A debt settlement company will use this knowledge to their advantage and settle for a fraction of the original balance, often saving debtors as much as 50%.

Their fees are charged as a percentage of the debt or a percentage of the money saved, but these fees are only taken when the settlement process has been finalized. This process can take 3 to 5 years and in that time you will be required to cover the settlement amounts, field phone calls from collectors, and deal with a lot of hassle, but at the end of it your debts will be cleared and you’ll have saved a lot of money.

A debt settlement program is one of the cheapest ways to clear credit card debt, but it’s not without its issues. The debt settlement company will ask that you stop making monthly payments, which reduces your credit score and increases your chances of being sued.

If you come into a sum of money and have had a few missed payments, you can try some personal debt settlement. Just contact your credit card company and offer a settlement amount. Start low and negotiate from there with the understanding that it may require multiple letters and phone calls and won’t happen overnight.

Debt Consolidation Loan

A debt consolidation loan uses one large loan to pay off many smaller ones. A debt consolidation loan company will give you a loan large enough to cover your debts at an interest rate small enough to reduce your minimum payments.

Sounds too good to be true, right? Well, there is one big issue.

While debt consolidation will reduce your monthly payment, it will do so at the expense of your loan term and total interest. You may pay several hundred dollars less per month, but you’ll be making that minimum payment for years to come

Balance Transfer

A balance transfer entails moving all your credit card debt (typically up to 5 credit card balances) onto a single credit card. There are specific balance transfer credit cards created for this process and they all offer a 0% APR introductory period that can last anywhere from 6 months to 18 months. In this time, you don’t pay any interest on your balance and only when that period ends will that interest start accumulating again.

The idea is simple: Use this trial period to clear your debt so that when it ends, you have a smaller balance, will accumulate less interest, and clear your debt quicker.

  • Balance transfer cards may charge a higher-than-average APR once the introductory period ends.
  • There may be additional fees.
  • You can transfer anywhere from 1 to 5 balances.
  • You can’t transfer balances to cards owned by the same credit card companies.

You need to pay a small transfer fee, often between 3% and 5%, but, in most cases, you’ll save much more than you’ll spend.

As an example, let’s imagine that you have a credit card debt of $20,000 split between several cards. The interest rate averages out at 25% and you have a combined minimum monthly payment of $800. In three years, you’ll clear this debt entirely but, in that time, you’ll pay over $8,000 in interest.

If you move the balance to a card with a 0% APR that lasts for 18 months and pay a 5% transfer fee, that balance will grow to $21,000. If you continue to make your minimum payment of $800, you’ll reduce that balance to just $6,600 once the introductory period ends. You can then clear it in just 10 months, paying less than $800 interest.

Debt Management

A debt management program can help you to consolidate your debt without adding many years to the term and many thousands to the balance. Its debt consolidation offered by nonprofit companies. They will assume control of your debts and agree terms with your creditors to make your payments more manageable. 

All future payments are processed via the debt management plan, after which they will be distributed to the relevant creditors, including credit card companies and loan providers. There are many benefits to debt management programs, but they’ll also ask that you close most of your credit accounts, leaving only one account open for emergencies. This will reduce your credit utilization ratio and could reduce your credit score significantly. 


It seems silly to place bankruptcy on a list of debt relief options. It’s a last resort, after all, and not something you should rush into. However, if you feel like your debts are getting the better of you and you have nowhere else to turn, it’s an option worth considering.

Chapter 7 bankruptcy will seek to liquidate your assets and use these to clear your debts. If you only have $10,000 worth of assets and $20,000 worth of debts, it doesn’t matter—they’ll still be discharged, and you can still move on. There are some debts that can’t be discharged, but credit card debt is not on that list.

Chapter 13 bankruptcy is less destructive and allows you to create a structured repayment plan, ensuring your creditors get what’s owed to them but in a way that doesn’t cripple you financially. Bankruptcy is expensive and will leave a negative mark on your credit report that remains for years, but it wipes the slate clean and allows you to carefully rebuild.

  • Bankruptcy can remain on your credit report for 7 to 10 years.
  • The process can cost up to $4,000 in filing fees and attorney fees.
  • You will be required to see a credit counselor.
  • Debts accumulated within 90 days will not be dismissed in bankruptcy.
  • Bankruptcy can seriously reduce your credit score.

If you need more help filing for bankruptcy, we have numerous guides covering the many aspects of this legal process, including Chapter 13 vs Chapter 7 Bankruptcy and How to Rebuild Your Credit After Bankruptcy.

Other Credit Card Debt Relief

The debt relief industry is huge and there are a multitude of ways you can pay someone to help you clear your debt and rediscover your financial freedom. But there are also a few ways it will clear on its own.

Circumstances in Which Credit Card Debt Can be Forgiven

Unlike student loans, the government doesn’t hand out a free pass for credit card debt just because you work in the public sector. However, there are a few ways it can be forgiven:

  • Debt Acquired as a Minor: If you accumulated the debt before you turned 18, then technically you did so illegally and are not obligated to repay it. This doesn’t apply, however, if it was co-signed.
  • Statute of Limitations: All debt has a statute of limitations and when this passes, you’re no longer legally responsible for it. This law changes from state to state and debt to debt.
  • Stolen Card: If the debt isn’t yours and was accumulated via fraud, you can have it forgiven as per the Fair Credit Billing Act.

What Happens to Credit Card Debt When You Die?

If you reside in a Community Property State, your spouse may be responsible for your debt when you die, but only if it was accumulated during the marriage. However, in every other state, the creditors will be forced to collect from your estate. If there is no money in that estate or it goes to debt with higher authority (such as tax debt or medical debt accumulated within 6 months of death) they won’t get anything.

Summary: Credit Card Debt isn’t as Bad as you Think

Debt is always bad. It can leave you stressed, anxious, and tired—it can impact your sleep, your confidence, your health. However, credit card debt is generally one of the easier debts to escape from. 

On the one hand, it comes with high-interest rates and can trap you in a cycle of persistent debt. On the other hand, there are a multitude of escape routes, creditors are more open to accept settlements, and if all else fails you can always file for bankruptcy or wait for the statute of limitations to pass.

Don’t let credit card debt get the better of you, fight back, use payoff strategies and debt relief programs, and regain your financial freedom!