What Happens If I Stop Paying My Credit Cards?

If you stop paying your credit card you are going to be charged late fees and your late payments will accrue more interest charges. These fees and extra interest charges will make your balance balloon and will cause you to get further into debt than you were previously. The increases can vary but you should expect to see a sizable chunk of your balance increase from fees and interest. Unfortunately for consumers undergoing hard times, things may get harder with the after effects of missed payments.

Lateness

Late payments are reported in chronological order from the first lateness occurring at the 30-day late mark and usually going up to as much as 180 days late (until the lateness stops being reported or the account is eventually charged off). After this time period most creditors will write the account off as a loss (time frames can vary and different creditors have different practices). After the account is written off as a loss it is either transferred internally to a different collection department or it is sold/transferred to a third party where further debt collection is pursued. Whatever the case, lateness follows you around so if you stop paying your credit cards it will show up on your credit report for up to 7 years.

Increased Debt

If you miss payments you’ll start to see your debt ballooning due to increased interest rates and miscellaneous finance fees. There’s no way to avoid these increased charges if you can’t afford to make payments. You could potentially call up your creditors to let them know you’re undergoing financial hardship but otherwise you won’t have too many options if you can’t afford to make minimum payments. All the above will lead to increase debt.

Potential for Litigation

A credit card company can sue you if you stop making your credit card payments. After a set amount of late payments, it becomes more and more likely that creditors seek to take legal action against you for debts owed. In this scenario the creditor will typically forward your debt to a law firm which will in turn pursue more aggressive collection activity. You can receive a summons and be summoned to appear in your local county court. If this occurs you will have more stringent negotiations ahead and you’ll likely have to put in some legwork to resolve the account.

Potential to Settle Your Accounts

Being behind on payments and having accounts in collections could potentially leave you open for settlement opportunities. If you’ve been behind on payments for quite a while many creditors could potentially let you settle your debt for less than the full balance owed. This would allow you to save money on your balances and put together a more manageable financial solution for you to become debt free.