Can I Stop Paying Credit Cards?
If you lose your job or have many unexpected expenses come up suddenly, you may be wondering if you can stop paying your credit card temporarily. There are consequences when you stop paying your credit card that you will have to deal with when your situation improves, but it can make more sense to stop paying your credit card than it does to stop paying your rent or mortgage instead.
Other People Are Reading
-
When to Stop Paying Credit Cards
-
Credit card companies have the right to sue you if you default on a credit card. They can send you to collections and report you to the credit bureau. However, caring for your basic needs should come before paying your credit card bills. You can deal with the consequences of not paying your credit card bill when your financial situation improves. If you are in a difficult situation like losing your job, you should contact the credit card company and see if they can work out any sort of temporary arrangements.
Consequences of Not Making Payments
-
When you are late for a payment, you will be charged a late fee and the interest rate on your credit card will go up. The credit card company will begin sending you late notices and calling you requesting payment. Eventually the credit card company will send you to collections and you may be sued for non-payment. If the credit card company wins, they may garnish your wages. This entire process may take more than a year, depending on the company you are dealing with. It will also make your credit score drop if you miss payments.
-
Alternatives to Not Making Payments
-
If your debt load is too high for you to manage, you may consider declaring bankruptcy. This will hurt your credit score, but it can help to reduce or eliminate many of your debts. Student loan debt cannot be eliminated through bankruptcy, and you will still need to make those payments. Depending on your income and the type of bankruptcy you qualify for, the judge will determine how much debt you will need to pay or if the loans will be forgiven entirely. A bankruptcy attorney can help you determine if you qualify.
Catching Up on Late Payments
-
Your credit card may turn you over to collections after six months of non-payment; at that point, you may be able to settle the debt. You can typically settle the debt for around 50 percent of the amount you owe. If the creditor agrees, request a letter verifying your agreement.
-
References
Resources
- Photo Credit credit card image by Jaimie Duplass from Fotolia.com
