What will happen if I just stop paying my credit card bills?
Understand the implications: Missing card payments will result in your credit score going down and the interest rate you pay going up. There is also the matter of late fees being added to your balance. That's a very bad combination for your financial future.
Falling behind on credit card bills could lead to fees, higher interest rates, a lower credit score and even a lawsuit. If you can't afford a payment, try to contact your card issuer to ask for a hardship option or contact a credit counselor for advice.
It's generally never a good idea to stop paying your credit card bills. Missing a payment by a single day can be costly, and the longer you go without paying the minimum amount due, the more damaging it can be to your credit score and financial well-being.
Consequences for missed credit card payments can vary depending on the card issuer. But generally, if you don't pay your credit card bill, you can expect that your credit scores will suffer, you'll incur charges such as late fees and a higher penalty interest rate, and your account may be closed.
If you default on your credit card debt and are unable or unwilling to work out an arrangement with your credit card company, you risk being on the receiving end of a debt collection lawsuit. Getting sued by a creditor or collection agency can be an unsettling experience, especially if you don't know what to expect.
Can I go to jail if I don't pay my credit card debt? NO. You cannot go to jail simply for failing to pay your credit card debt. It is also illegal for creditors or debt collectors to threaten you with arrest or any kind of criminal penalty to try to get you to pay.
Outside of bankruptcy or debt settlement, there are really no other ways to completely wipe away credit card debt without paying. Making minimum payments and slowly chipping away at the balance is the norm for most people in debt, and that may be the best option in many situations.
But there's a statute of limitations for how long creditors can sue you for outstanding credit card debt, which varies from three to 10 years in most states. You could skip payments, but you might be liable for them later. “Technically, you can stop paying your credit card bills, but it isn't advisable,” said Tayne.
While debt collectors cannot have you arrested for not paying your credit card debt, creditors can still use the legal system to make sure they get their money back. The most common legal recourse is to sue you for payment. If you get sued for unpaid credit card debt, don't ignore the lawsuit.
Fortunately, your home is safe from any creditors who do not have a mortgage or lien on it. Credit card companies and other unsecured loan holders can't come and simply take your property or home after missing a few payments. A creditor will first start making collection attempts by mail, phone calls or other methods.
How long before a credit card company sues you?
How long before credit card companies sue for debt? After all collection efforts have been exhausted, credit card lawsuits are generally initiated after 180 days since the first missed payment. In other words, credit card companies will usually wait until around six months of non-payment have passed before suing.
Lawsuits aren't very common, but they do happen regularly. According to a Consumer Financial Protection Bureau (CFPB) report, credit card companies sue for non-payment in about one of every seven cases or nearly 15% of the time. The average litigated account balances ranged from $2,700 to $12,300.
It is important to note that Capital One has the highest number of subprime borrowers of any lender in the U.S. This combined with the finding that it also files the most lawsuits means that some of the most vulnerable and financially-strapped people can find themselves feeling kicked when they're already down.
First off, you should know that it's not illegal to stop paying your credit cards. You can't be sent to jail and debt collectors are not allowed to threaten you in order to get money. They can, however, choose to sue you in certain circ*mstances.
If you don't pay your credit card bill, you will have to pay late fees, increased interest charges and it can cause damage to your credit score. If you continue to miss payments, your card can be frozen, your debt could be sold to a collection agency and the collector of your debt could also sue you.
- Add up your income and expenses. Look for ways to cut costs. ...
- Call your credit card company. When you talk to your credit card company, be sure to clearly explain: ...
- Consider credit counseling. ...
- Watch out for debt settlement or debt relief companies.
If this happens: Your lender will contact you to demand the missing payments are made. Then if you don't make the payments they ask for, the account will default. And if you still don't pay, further action may be taken, such as employing debt collection agents to recover the money you owe them.
The other risk you take by ignoring your debt is that your creditor — or a third-party collection agency that has taken over your debt — could sue you for the amount you owe, plus interest and penalties. There's a time limit on when they can do that too, but it varies depending on the state you live in.
The Account Can Be Sent to Collections
If you skip several months' worth of payments, your credit card account might be sold to a debt collector. Not only does this hurt your credit, but debt collectors are known for putting a lot of pressure on debtors.
Bankruptcy. Filing for Chapter 7 bankruptcy wipes out unsecured debt such as credit cards, while Chapter 13 bankruptcy lets you restructure debts into a payment plan over 3 to 5 years and may be best if you have assets you want to retain.
Can credit cards be forgiven?
While it's highly unlikely that any credit card company will forgive 100% of your debt without it being part of a bankruptcy, you may be able to negotiate a settlement with your lenders in which they forgive a percentage of the balance you owe.
You can close a credit card with a balance, but there are a few things to keep in mind. First, by closing the credit card you will no longer be able to use the card to make purchases. Second, you are still responsible for paying off the rest of your balance. Third, the outstanding balance can still accrue interest.
Ignoring these efforts could lead to further financial strain, potential wage garnishment, or the seizure of assets through a court judgment. Additionally, the debt may continue to accrue interest and fees, increasing the total amount owed over time.
Chapter 7 bankruptcy: This fairly quick legal process can wipe out your unsecured debts through what's called a “discharge.” Chapter 13 bankruptcy: Chapter 13 can also result in a discharge, but typically only after you complete a 3-5 year repayment plan.
When you stop making credit card payments, you could not only be charged late fees and higher penalty interest rates, but also take a hit on your credit. If your unpaid balance lingers for too long, your account may go to collections, and you could be served with a debt collection lawsuit.
