How to Write Off Credit Card Bills

If your broke, you can achieve some temporary relief by defaulting on your credit cards.

When a credit card defaults, industry parlance terms it a "write-off." The simplest method to write off credit card debt is to stop paying the bills. After 90 days or more of delinquency, the credit card company will move to close the account and to collect the amount owed. As credit card debt is unsecured, it can be challenging for the company to actually collect on the debt. Charging off credit cards will damage your credit rating, making it more challenging to borrow money and to get access to affordable loan rates.

Instructions

1. Review your personal finance situation carefully before considering writing off any credit cards. Writing off a credit card has a powerful negative effect on your credit rating. It will impede your ability to access relatively low interest rates for auto loans, mortgages, personal loans and other credit cards. It may also impact your ability to get a job, as some employers check credit reports.

2. Stop paying the credit cards that you want to charge off. Other credit card accounts that you have might be adversely affected by defaults. Companies reserve the right to cut your credit limit or raise your interest rates if your credit score declines precipitously.

3. Document and respond to all correspondence sent by your credit card company. Maintaining open lines of communication reduces the chances that the company might take adverse legal action against you. Many credit card companies will also forgive portions of your debt or reduce your interest rate in return for resuming payments on the card.

4. Attend any court dates that the credit card company might summon you to. While the court my obtain a judgment against you, merely showing up for a court date can increase your chances of escaping any asset seizures or wage garnishments.

5. Wait until the credit card default stops affecting your credit report. In most cases, this happens after seven years of inactivity on the account.

References

• MarketWatch: The 15-Minute Tip: Surviving a credit-card default
• Loan.com: The Consequences of Defaulting on Credit Card Debt

Resources

• Bills.com: Effects of Credit Card Default
• CreditCards.com: Beware of IRS tax bite that may follow canceled debt