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Stop Paying Credit Card Debt: No More Worries

It’s tempting to give up and stop paying your credit card bill. Learn strategies to deal with debt successfully.

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Updated September 16, 2024
Written by Rachel Alulis
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Key takeaways

  • Stopping payments on your credit card bills can lead to a lower score, increased interest rate, late fees, and having your accounts sent to collections.
  • Consumers have legal rights and protections against debt collection. Know your rights and how to handle collection efforts.
  • There are many ways to get out of debt including debt repayment plans, negotiating with creditors, consolidation loans, and even bankruptcy.

Wouldn’t it be nice to stop paying credit card debt and forget about it? Credit card debt is a growing problem in the United States. According to the Federal Reserve Bank of New York, American credit card debt climbed to $1.142 trillion in the second quarter of 2024.

Given those figures, it’s not surprising that millions of Americans are having difficulty keeping up with their bills. “What if I stop paying my credit cards?” is a thought that crosses many people’s minds. It’s tempting to give up and stop paying, but the problem is that doing so has serious consequences. 

In this article, we’ll explain what happens if you don’t pay your debts and help you find strategies to repay what you owe. With the right tools, you can regain control of your financial life and stop worrying about debt.

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Consequences of not paying credit card bills

Ever considered not paying your credit card bill? If that’s the case, it’s important to understand what happens.

Impact on your credit score

Your credit score will take a hit as soon as you miss your first minimum credit card payment. Your payment history makes up 35% of your score. This makes it the most significant factor in calculating your score. Missing a payment can have serious consequences.

When you stop making payments, your lender reports your account as delinquent to the credit bureaus—Experian, Equifax, and TransUnion. Your first missed payment can drop your score by 50 to 100 points. The higher the score, the bigger the drop. Each subsequent missed payment will further damage your score. The lower your score, the harder it is to secure favorable interest rates or even pass certain employment screenings. Missed payments stay on your credit report for up to seven years.

The one positive here is the further you get from a missed payment, the less effect it has on your score. So, if you miss a payment, the negative mark will not have the same impact on year four as it had when you first missed the payment. In other words, you can rebuild your score, it’s not the end of the world.

Late fees and increased interest rates

penalty interest rates

If you don’t make the minimum payment due, expect to be charged a late fee. The maximum late fee allowed by law for the first missed payment is $30. It then shoots up to $41 for subsequent missed payments. That adds up fast. If you miss five payments, you could pay $194. The exact amount is set by your credit card issuer.

In addition to late fees, your credit card issuer may increase your interest rate. Many companies apply penalty APRs (Annual Percentage Rates) for late payments, which can dramatically increase the amount of interest you owe.

Possible collection of your account

Your account will be marked as delinquent and you’ll start receiving calls and letters from the creditor attempting to collect the debt. If the account remains unpaid for 180 days, it is likely to be sold to a third-party collection agency, which will then take over the collection efforts.

If you’re wondering what happens if you never pay collections, be prepared for persistent collection calls and letters. Dealing with collection agencies can be stressful and even more harmful to your score.

Legal action for credit card debt

In extreme cases, collectors may sue you for the outstanding balance plus any fees and interest accrued. If the court rules in their favor, they may be granted a judgment to garnish your wages or levy your bank accounts.

What happens if you quit paying your credit cards? In short, you’ll be charged lots of fees, your score will plunge, and you may be taken to court. Missing payments are not the way to go.

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Stages of credit card delinquency

The consequences of a delinquent credit card account depend on how late you are.

30 days late: Late fee and it may be reported to the credit bureaus

60 days late: Another late fee and it is reported to the credit bureaus

90 days late: A third late fee, a 90-day late mark on a credit report, and possible penalty APR.

120-180 days late: Creditors may charge off the debt and send it to collections.

Beyond 180 days: The debt is likely sold to a collection agency, leading to persistent collection attempts and potential lawsuits.

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Payday loans piling up?

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How to resolve debt with every debt collector

Resolving debt with collection agencies can be daunting but it’s a manageable task.

The key is to:

  • Never admit to the debt
  • Always verify the debt
  • Get everything in writing
  • Negotiate

Don’t admit to the debt: Do not confirm that the unpaid bill is yours. Listen to what the collector has to say, but do not volunteer any information. If you admit it is yours and it’s passed the statute of limitations, you may legally have to pay it.

Verify the debt: Request a debt validation letter. This letter should detail the amount owed, the original creditor’s name, contact information, when the last payment was made, and how to dispute it. Verifying the debt ensures you’re not paying something you don’t owe.

Communicate in writing: Keep a record of all communications with collection agencies.

Negotiate a settlement or payment plan: Be honest about what you can afford to pay. Many collectors are willing to settle for a lesser amount or agree to a payment plan that fits your budget. Don’t be afraid to negotiate.

Reasons why you should never pay a charge-off when the collection agency first calls include that the debt may not be yours, you may restart the statute of limitations, and you may be able to settle the debt for a lower amount.

What to do if sued by a debt collector

Debt collectors may sue you to force you to pay. If this happens, you should first read the summons and complaint to understand the claims against you. Then, file a written response with the court. Address each allegation, either admitting, denying, or stating you lack sufficient information. Include any defenses or counterclaims you have. 

You can learn more about answering a summons without an attorney by attending free legal clinics or seeking advice from a legal aid organization. Whether you choose to answer by yourself or with an attorney, it’s very important to follow the court’s instructions for formatting and filing the response within the specified deadline. Not responding in time may result in the court automatically siding with the debt collector.

What protections do I have if I stop paying credit card debt

For those who have stopped paying credit cards years ago or are considering this route, it’s important to understand the protections in place.

The Fair Debt Collection Practices Act (FDCPA) protects consumers from abusive, unfair, or deceptive debt collection practices by creditors and collection agencies. It limits how and when collectors can contact you and gives you the right to request that they stop contacting you.

By federal law, debt collectors cannot:

  • Harass you
  • Make false statements
  • Use deceptive methods
  • Threaten you with legal action, jail time, property liens, wage garnishment, etc.
  • Use abusive language
  • Misrepresent what you owe
  • Contact you at odd hours
  • Call you at work

If a collector does not comply, you can file a complaint with the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), or your state’s attorney general’s office. Be sure to provide details of the harassment and written evidence of all communications with the collector.

You can send a cease and desist letter to the collection agency asking them to stop contacting you, even if they haven’t violated the FDCPA. While this stops the calls and letters, it does not eliminate the debt, and the creditor can still take legal action.

Additionally, states set statute limitations on debt, typically 3 to 6 years for credit cards. Once the statute of limitations has passed, collectors can contact you about unpaid bills but they cannot sue you.

These protections can offer some relief but they do not absolve you of your obligations. Credit card companies can still take action if you stop paying.

Are you trying to save but still owe money?

Check out if you should pay off debts or save money first.

How to get rid of your credit card debt legally

You cannot stop paying credit card debt legally without facing serious consequences, as went over earlier. You certainly cannot get rid of credit card debt without paying anything at all. You can, though, employ strategies to pay your debt efficiently and possibly for less.

Minimum credit card payments

Minimum payments are the smallest amount you must pay each month to keep your account in good standing. Typically, they are 1%-3% of your outstanding balance or a fixed dollar amount, whichever is greater. Making minimum payments will help you avoid late fees, but interest will accrue.

Tackling credit card debt requires making more than the minimum payments. Minimum payments will keep collectors away but cause the interest to grow.  So, to reduce debt more effectively, aim to pay more than the minimum.

Snowball and avalanche methods

A popular debt payment strategy is the snowball method. In this method, you pay off the smallest bill first while making minimum payments on the rest of your cards. The result is small wins and motivation to keep going.

If you want to save money, try the avalanche method. Here, you prioritize repaying debts with high interest rates first while making minimum payments.

pile of credit cards

Debt management plan

Debt management plans are offered by nonprofit credit counseling agencies. They consolidate your unpaid bills into a single monthly payment at a reduced rate to make it affordable. You pay the agency, and they disperse your payments to creditors.

Debt settlement

If you’re overwhelmed with bills, learning how to settle credit card debt might be a viable solution. Debt settlement involves negotiating with creditors to pay a lump sum that’s less than the total amount owed. This can be done independently or through a debt settlement company. While it can significantly reduce your debt, it also negatively impacts your score, has potential tax implications, and companies charge fees.

Stop paying and negotiate

Stop paying if you can no longer afford to catch up. Then, negotiate with the collection agency to pay a lump sum that is less than you owe or see if you can get credit card debt forgiveness. Collectors are human, too. They may be willing to take a lesser amount or agree to an affordable payment plan if it means they’ll get paid. Always get the agreement in writing.

Want to negotiate with creditors and collectors?

Check out how you can negotiate debt and potentially pay less.

Debt consolidation

If you want to know how to stop interest on credit card debt, consider taking out a personal loan with a lower interest rate and using it to pay your bills. You’ll pay less interest each month and only have one debt. Debt consolidation is a great way to save money and simplify payments.

Read more about debt consolidation.

Consider bankruptcy

If none of the above options work, consider bankruptcy. Chapter 7 erases unsecured debt, but you have to sell your assets, and it stays on your report for 10 years. Chapter 13 has you repay your debts under a court-ordered repayment plan, but it stays on your report for seven years. Bankruptcy can offer a fresh start, but it comes with serious repercussions.

How to settle your medical debt

Who should you contact if you have trouble making payments on medical bills? The hospital’s billing department. They may offer payment plans, financial assistance, income-based hardship plans, or charity care for eligible patients. Explain your financial situation and request a payment plan that fits your budget or a reduced lump-sum settlement. Depending on your situation, you may qualify for a plan that reduces or forgives your medical debt entirely.

Want to consolidate?

Find out how to consolidate debt without impacting your credit score.

How to resolve student loan debt

There are several ways to resolve student loan debt.

Income-driven repayment plans: Federal student loans offer plans that cap payments based on your income and family size, potentially reducing monthly payments and extending the loan term.

Loan forgiveness programs: Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness are options for those in qualifying professions. These programs forgive the remaining balance of federal loans when you work a qualifying job and make a set number of payments.

Deferment or forbearance: Temporarily pause payments if you’re facing financial hardship. Interest may still accrue.

Consult with a financial advisor or student loan counselor to determine the best approach for your situation.

Sued by a debt collector?

Creditors can sue, but you can fight it.

Frequently asked questions

1. What happens if your payment is 30 days late?

When your payment is 30 days late, credit card companies typically charge a late fee and may report the delinquency to the credit bureaus, causing your score to drop. If it’s your first missed payment, they may not report it.

2. What happens at 60 days late?

At 60 days late, the consequences intensify. Your issuer will report a second late payment to the bureaus, further hurting your score. You’ll incur another late fee and may be subject to a penalty APR. The penalty APR and additional fees make it harder to catch up and pay your card balance.

3. What happens at 90 days late?

At 90 days late, issuers will again charge a late fee and report the late payment. Your score may drop by 180 points this time. Your account may be classified as a “charge-off” and sold to a collection agency.

4. What is the best way to avoid falling into credit card debt?

The best way to avoid debt is to spend only what you can afford to repay each month. This way, you will always be able to pay your bills.  Additionally, will never be charged interest if you pay on time and in full.

5. How much credit card debt is too much?

Debt becomes too much when it exceeds 30% of your limit and you’re struggling to make minimum payments.

6. Can I negotiate credit card debt?

Yes, contact your issuer to discuss options such as lower interest rates, reduced monthly payments, or a lump-sum settlement.

7. What is a reason to pay more than the minimum payment due on your credit statement each month?

Paying more than the minimum payment helps reduce the principal balance faster, saving you money on interest charges. It also shortens the repayment period and improves your credit score by lowering your utilization ratio.

8. Can you pay a credit card with a credit card?

You generally cannot pay a credit card with another card. You can use a balance transfer card with a lower interest rate to move debt from one card to another. The lower interest rate can help you pay off debt faster.

9. Why is it difficult to get out of debt when you only pay the minimum payment?

Only paying the minimum amount means most of the money goes toward the interest and only a small portion toward reducing the principal balance. You’ll continue to accrue interest on your balance. To get out of debt, you need to pay down both the principal and the interest.

10. How can you avoid paying interest on your credit cards?

Always pay your balance in full by the due date each month. This prevents interest charges from accruing. It can also be a good idea to pay your credit card early. Early payments help you avoid interest and keep your usage rate low, which will help improve your score.

11. Can you go to jail for not paying credit card bills?

No, you cannot go to jail for not paying credit card bills, as it is considered a civil debt, not a criminal offense. However, creditors can take legal action against you to recover the debt, which may result in wage garnishments or liens on your property.

12. What happens if I don’t pay my credit card bills for five years?

Your debt will likely be sold to collections, severely damaging your credit score. You may face legal actions, including lawsuits and wage garnishments.

13. What is the long-term consequence of paying less than the minimum amount due on your bills?

You will significantly damage your credit score. A low score can lead to higher interest rates on future loans, difficulty with obtaining credit, and potential legal actions from creditors.

14. When should you pay your credit card bill to increase your credit score?

You should pay your bill in full before the due date. One tip to effectively pay a credit card bill to build credit, set up automatic payments to avoid missing due dates and incurring late fees.

15. Is it better to pay off one credit card or reduce the balance to two?

It is better to pay off one credit card first while making the minimum payments on your other cards. Doing so will help improve your credit utilization ratio – which is very important for your credit score – and paying off one card entirely can motivate you to keep going. If you want to save money, choose the credit card with the highest interest rate to pay off first.

16. When do credit cards charge interest?

Credit cards charge interest when you carry a balance past the due date. To avoid interest, pay your full statement balance by the due date each month. Paying your credit card bill on time will also help you build credit.

Bottom line

The temptation to stop paying credit card debt and not to worry about it might seem appealing, but the consequences are far-reaching. Stopping payments affects your financial well-being and creditworthiness for years to come. 

Instead of ignoring your unpaid bills, explore alternative payment methods to get out of debt effectively. From debt relief programs to DIY strategies, there are plenty of ways to break free from debt’s grip and get on with your life.

MoneyFor can help you become debt-free, secure a loan, or find the right credit card. See how we can help you improve your personal finances.

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About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.

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