Consequences Of Not Paying Credit Card Bills

• Cardholders can contact the credit card company first if they know they will be late making payments. Companies are more likely to work out a payment plan if contacted by the cardholder. Additionally, cardholders should not ignore calls from creditors. It is a good idea to explain the situation and negotiate a payment plan.
• 60 days delinquent: Credit card companies will pass the account to a collections department. Collection will become more aggressive and the lender will report the delinquency to a credit reporting company, if they have not already done so. Cardholder will likely have to pay a penalty, but may still be able to negotiate a payment plan.
• 90 days delinquent: Credit card company will likely close the account and become even more aggressive in pursuing collection. Late fees and interest will accumulate. Cardholder can agree to a payment plan to restore the account.
• Charge-off status: Credit card company will write the debt off as uncollectible, report status to credit reporting company, and may sell the account to a debt collector. Cardholder can negotiate a payment plan or settlement. If possible, it may be more beneficial to negotiate with original creditor. The settlement should be in writing and settle the account in full.
• Court: The credit card company or debt collector can sue to collect the debt. If they win, a judgment could allow them to garnish wages or seize assets to cover the debt. Cardholders should appear in court if sued, otherwise the creditor will win by default.

Source:

Janna Herron, What If You Stop Paying Your Credit Cards?, https://today.msnbc.msn.com/id/43690720/ns/today-money/ (accessed July 31, 2011).