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Key takeaways

  • The consequences of not paying your credit card bills can be worse. Your score will drop, creditors may increase your interest rate, charge late fees, and send your bill to collections.
  • Consumers do 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. Debt repayment plans, negotiating with creditors, consolidation loans, and even bankruptcy can help you become debt-free.

Stop paying credit card debt right now and end the stressful cycle. The burden of unpaid credit card debt can be too much to bear. It can feel like no matter what you do, there’s no way to repay the debt.

Struggling to pay credit card debt is a problem millions of Americans face. It’s tempting to just stop paying. The problem is what happens then?  

We’ll go over strategies on how to stop paying credit card debt and stop worrying about it so you can get on with your life.

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 if you stop paying credit cards.

Impacts Credit Scores

Your credit score will take a hit as soon as you miss your first minimum credit card payment. Payment history is the biggest factor in how credit scores are calculated. When you miss a payment, it’s reported to the credit bureaus. Even one missed payment can lead to a noticeable drop in your score.

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 on your outstanding balance.

The account can be sent to collections

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 likely be sold to a third party collection agency, which will then take over the collection efforts. Dealing with collection agencies can be stressful and can further harm your score.

You can be sued for credit card debt

In extreme cases, collectors or creditors can 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 making it hard to get loans or cards in the future, and you may be taken to court. Missing payments are not the way to go.

Tips on debt management

Stages of credit card delinquency

Credit card delinquency occurs in stages, each with increasing consequences:

30 Days Late: Your payment is 30 days past due, resulting in a late fee and a potential negative mark on your credit report.

60 Days Late: Another late fee is added, and the missed payment further harms your credit score.

90 Days Late: You have a seriously delinquent credit card account. Creditors may increase your interest rate and report the continued delinquency to credit bureaus, causing further damage to your score.

120-180 Days Late: The account is now severely delinquent, and creditors may charge off the debt, sending it to collections. This significantly impacts your credit score and may lead to legal action to recover the debt.

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

Each stage of credit card delinquency makes it harder to pay your balance and further harms your score. That’s why it is important to eliminate debt as soon as possible. Make at least your minimum payment as soon as you can and you may be able to avoid even one negative mark on your credit report.

Will Your Credit Score Be Impacted?

The decision to stop paying your credit cards can have significant, long-lasting effects on your credit score. Your payment history makes up 35% of your score. Missing a payment can have serious consequences.

When you stop making payments, your lender will report your account as delinquent to the credit bureaus. 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 making it hard to secure favorable interest rates or even pass certain employment screenings in the future. Missed payments stay on your credit report for up to seven years.

The good news is, the further you get from a missed payment, the less effect it has on your score. So yes, the negative mark will not have the same impact on year six as it had when you first missed the payment.

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 from the collector. This letter should detail the amount owed, the original creditor’s name, contact information, when the last payment was made, and how you can 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. Written correspondence is crucial for documenting what has been discussed and agreed upon.

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 to find a mutually agreeable solution.

How to answer a summons without an attorney

How to answer a summons for debt collection without an attorney is a common question. First, read the summons and complaint carefully to understand the claims against you. File a written response with the court, addressing each allegation, either admitting, denying, or stating you lack sufficient information. Include any defenses or counterclaims you have. Follow the court’s instructions for formatting and filing the response within the specified deadline. Additionally, send a copy of your response to the plaintiff or their attorney. Consider seeking free legal advice or resources from legal aid organizations to ensure your response is adequate.

How to stop paying credit cards legally

To stop paying credit cards legally, consider negotiating a debt settlement where you agree to pay a reduced amount as a lump sum. Alternatively, enrolling in a debt management plan (DMP) through a credit counseling agency can consolidate your payments into a single, manageable monthly amount. As a last resort, filing for bankruptcy may discharge your credit card debt, but this has significant long-term consequences on your credit. Always consult with a financial advisor or attorney to explore your options and ensure you comply with legal requirements.

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 not just the consequences but also the protections in place. You’ll be contacted by creditors or collection agencies seeking repayment. This can be stressful but you are not without defenses.

The Fair Debt Collection Practices Act (FDCPA) protects consumers from abusive, unfair, or deceptive debt collection practices. 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. This includes legal action, jail time, property liens, or wage garnishment
  • Use abusive language
  • Misrepresent what you owe
  • Contact you at odd hours
  • Call you at work

If a collector does any of these things 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. 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.

How to resolve student loan debt

There are several ways to resolve student loan debt. The right one depends on your personal situation.

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 full-time in qualifying public service or non-profit jobs and make a set number of payments.

Refinancing: Consolidate your loans with a private lender to secure a lower interest rate, reducing monthly payments. This option is best for those with good credit and steady income.

Deferment or Forbearance: Temporarily pause payments if you’re facing financial hardship. Interest may still accrue, but it provides short-term relief.

Settlement: Negotiate a settlement for less than the full amount owed, though this can impact your credit score and has tax implications.

Stay Informed: Policies on student loans are constantly changing. Keep up to date with forgiveness programs and repayment options from government websites or reputable financial publications.

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

Settle your medical debt

The first step to settling medical debt is to review your medical bills for accuracy and dispute any errors. Next, negotiate directly with your healthcare provider. Contact the billing department to explain your financial situation and request a payment plan that fits your budget or a reduced lump-sum settlement. You may have to provide documentation of your income, assets, and budget as evidence and express your willingness to pay what you can afford.

Additionally, inquire about financial assistance programs. Many nonprofit hospitals and providers offer income-based hardship plans or charity care for eligible patients. These plans can reduce or forgive medical debt entirely. You may first have to apply for Medicaid or other assistance programs to be eligible.

If the debt is already with a collection agency, you can still negotiate a settlement. Offer a lump-sum payment or request a manageable repayment plan. Ensure any settlement agreement is documented in writing before making payments. Keep in mind that settling any debt can have a negative impact on your credit.

Other Ways to Get Rid of Your Credit Card Debt

Tackling credit card debt requires making more than the minimum payments. Minimum payments will keep collectors away but cause the interest to grow. To eliminate your debt more efficiently consider these options.

Minimum credit card payments

Minimum credit card payments are the smallest amount you must pay each month to keep your account in good standing. Typically, this amount is a small percentage of your outstanding balance, around 1-3%, or a fixed dollar amount, whichever is greater. While making minimum payments helps you avoid late fees and credit score damage, it results in slow debt repayment and high interest costs over time. Continuously paying only the minimum can lead to prolonged debt and increased financial burden. To reduce debt more effectively, aim to pay more than the minimum whenever possible.

Snowball and Avalanche Methods

pile of credit cards

It helps to break down massive debts into bite-sized pieces. Make a list of everything you owe and decide how you’re going to pay them back. Having a roadmap can ease anxiety and help you stick to a plan.

A popular strategy is the Snowball Method where you pay off the smallest amount first while making minimum payments on the rest. You see progress right away and can celebrate all your little wins.

If you want to save money, try the Avalanche Method and prioritize repaying debts with high interest rates.

Debt Management Plan

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

The nonprofit counselor can also help you set a realistic budget, provide strategies to improve your finances, and give you financial resources.

Debt settlement

Debt settlement involves negotiating with creditors to pay a lump sum that’s less than the total amount owed to settle your debt. This can be done independently or through a debt settlement company. While it can significantly reduce your debt, it has potential downsides, including a negative impact on your credit score, possible tax implications, and fees charged by settlement companies. It’s important to weigh the benefits and risks carefully and consider other options like credit counseling or debt management plans. Always ensure any agreement is in writing before making payments.

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. Always get the agreement in writing. A bill settled for a reduced amount will stay on your report for up to seven years, but you’ll be done with it. If you don’t want to settle debts on your own, you can always work with a debt settlement company.

Stop harassing phone calls from debt collectors

Call your credit card company and explain what happened. Creditors are human too. They may be willing to waive late fees, offer a reduced interest rate, or let you join a hardship program. It never hurts to ask.

Try to call before you miss a payment. If you’ve already missed one, call right away. You’re more likely to secure favorable terms if you’re open and honest about your situation. Creditors want to recover their money, so they may make it easier for you to pay if it means they’ll get something rather than nothing.

Debt Consolidation

Take out a personal loan with a lower interest rate and use it to pay your bills. You’ll be paying less interest each month and only have one debt to pay. Debt consolidation is a great way to save money and simplify payments.

Consider Bankruptcy

If none of the above options work, consider bankruptcy as a last resort. Chapter 7 erases credit card debt but you have to sell your assets and it stays on your report for ten years. With Chapter 13 you must repay your debts using a court-ordered repayment plan. You get to keep your assets and it only stays on your report for seven years. Bankruptcy can offer a fresh start but it come with serious repercussions.

Frequently Asked Questions

When a minimum payment is 30 days late, credit card companies typically charges 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. The credit card company may also contact you to work out a solution.

At 60 days late, the consequences intensify. Your credit card issuer will report a second late payment to the bureaus further hurting your score. Late payments stay on your report for up to seven years. Additionally, you’ll incur another late fee and may be subject to a penalty APR, significantly increasing your interest rate. The penalty APR and additional fees make it harder to catch up and pay your card balance.

At 90 days late, credit card companies 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 “charge-off” and sold to a collection agency. A charged-off account indicates to lenders that the creditor doubts the debt will be paid back. This can severely limit your ability to obtain future credit.

The best way to avoid falling into credit card debt is to create and stick to a budget, ensuring you only spend what you can afford to pay off each month. Additionally, prioritize paying off the full balance to avoid interest charges, and limit the number of credit cards you use to keep track of expenses more easily.

Credit card debt becomes too much when it exceeds 30% of your credit limit, impacting your credit score and financial stability. Additionally, if you struggle to make minimum payments, pay high-interest rates, or sacrifice essential expenses to manage debt, it’s a sign that your credit card debt is unmanageable and needs immediate attention.

Yes, you can. Learning how to negotiate credit card debt can save you significant money and reduce financial stress. Contact your credit card issuer to discuss options such as lower interest rates, reduced monthly payments, or a lump-sum settlement for less than the full amount owed. Additionally, working with a credit counseling agency can help negotiate terms and create a manageable repayment plan.

Paying more than the minimum payment on your credit card each month 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 credit utilization ratio. This proactive approach leads to greater financial stability and freedom.

You generally cannot directly pay a credit card with another credit card. However, you can use a balance transfer to move debt from one card to another, often with a lower interest rate. This can be a strategic way to manage and reduce debt if you take advantage of promotional offers and pay off the balance within the promotional period.

When you only pay the minimum amount on your credit card bill, most of the money goes toward the interest and only a small portion toward reducing the principal balance. This means you will continue to have a large principal balance, which will accrue more and more interest. To get out of debt you need to pay more than the minimum so that your payment will go toward both the interest and principal balance.

To avoid paying interest on your credit cards, always pay your balance in full by the due date each month. This prevents any interest charges from accruing. Additionally, take advantage of any interest-free promotional periods, and avoid cash advances, which typically have immediate and higher interest rates. Managing your spending and timely payments are key.

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. It’s important to communicate with creditors and seek debt management solutions.

If you don’t pay your credit card bills for 5 years, your debt will likely be sold to collections, severely damaging your credit score. You may face legal actions, including lawsuits and wage garnishments. Additionally, unpaid debts remain on your credit report for up to seven years, making it difficult to obtain new credit or loans.

A long-term consequence of paying less than the minimum amount due on your bills is significant damage to your credit score. This can lead to higher interest rates on future loans, difficulty obtaining credit, and potential legal actions from creditors. Additionally, the unpaid balance will continue to grow due to accruing interest and fees, increasing your overall debt.

Bottom Line

The temptation to stop paying credit card debt and stop worrying about it might seem appealing but the consequences are far-reaching. Stopping credit card payments affects your financial goals and creditworthiness for years to come.

Instead of ignoring your unpaid bills, explore alternative solutions such as negotiating with your credit card issuer, seeking counseling from a nonprofit agency, or restructuring your budget. Taking proactive steps toward addressing your debt is possible. A debt-free life is within your reach.

MoneyFor can help you become debt-free, secure a loan, or find the perfect job. See how we can help you improve your financial wellbeing.

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.