Home > Managing Debt > What Happens If I Don’t Pay My Credit Card Bill?

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Bills. Ick. Many of us have thought, “What would happen if I just pretended this credit card bill didn’t exist? Hmmm…”

However, failing to pay your credit card bill can have a slew of consequences, and they only get nastier as time goes on. In addition to the almost certain stress you’ll experience the longer your debt goes unpaid, avoiding your credit card bill is like taking a sledgehammer to your credit standing. There will be a lot of damage to undo. The terms of every credit card are different, but in general, the experience would typically go something like this.

Late Fees

Once your bill’s due date has passed, you’ll incur late fees. Penalties can add up quickly, and considering you couldn’t afford the bill in the first place, it’s unfortunate to have to owe even more. Each time you miss a due date, you’ll probably see another fee.

Delinquency

If you go an entire billing cycle without making a payment, you’ll be considered 30 days past due, which your issuer will report to the credit bureaus. Even one late payment can cause a significant drop in your credit score, and the more payments you miss, the worse your score will get. If you want to see what that could mean for you, you can check your credit scores for free with Credit.com and use one of the tools to show you how much your score could drop after a late payment. Watching your score hypothetically plunge is scary enough to make you avoid it in real life.

After another billing cycle, you’ll be 60 days past due. You’re probably going to start getting frequent phone calls from your creditor, if you haven’t already. It’ll get more intense once you hit 90 days past due, and your available credit will get cut off at some point. Then there’s the interest you’ve incurred on your original debt by now; you will definitely owe more than when you first missed the payment.

Charge-Off

If you continue to avoid paying, the credit card company will write your debt off as a loss, which is called a charge-off. That’s a bad thing to have on your credit report, because it shows you failed to pay a debt, and it could be challenging to obtain more credit for awhile. A charge-off is hardly the end of the saga, however, because you could receive a 1099-C from the IRS for canceled debt, meaning you’ll be expected to pay taxes on that debt.

Collections

After charging off your debt, a credit card company may sell it to a debt collector for cents on the dollar, in an attempt to recoup some of its losses. You’ll have a collections account on your credit report (another major negative), and you’ll have to deal with the stress of having collectors contact you and try to get you to pay. You can request they stop reaching out to you (here’s how to do that), and you can try to settle the debt for less than it’s worth, just to get it over with.

Judgment

On the other hand, the creditor may decide to take legal action to try and get you to pay your credit card bill. If you have a judgment filed against you, that’s two bad things: First, you have to pay, and second, a judgment is yet another negative item on your credit report.

This is why running away from credit card debt isn’t the answer. It’ll find you. If you have trouble paying, it can help to be proactive: Reach out to your creditor to work out a solution to the problem (like a payment plan, for example), and hopefully you can avoid a credit disaster.

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Image: Piotr Marcinski

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  • M.R. Morris

    One thing not stated here is that the negative credit whether you pay it or not it will come off you credit after 7 years from the charge off date. This is based on the fair credit collection act and fair credit reporting act. look it up. they can continue to call you forever until you tell them to cease and desist (you remove their right to contact you).

  • barbara

    I was so interested in what jack Madison had to say 10 months ago about the illegality of the credit card companies and the IRS. just what do I say in a letter that will state this illegality and win so that they will not take me to court or put a lein on my house or freeze , etc. my bank account or send me a 1099c form to pay taxes on the debt I’ve incuured ? Our society is set up for us to fail because the government allows the banks and themselves to create these illegal systems. most don’t know how to fight them (if we can), but I was grateful to read jack’s post because I see there are people out there who have the knowledge and are willing to fight as well as share information. I thank you very much. I don’t feel as anxious as I did knowing there may be a change for me to get this debt off my back without having to spend more money or lose more.

    • http://www.Credit.com/ Gerri Detweiler

      Barbara – Please be careful. Companies that claim the IRS and credit cards, Federal Reserve etc are illegal have been around forever. If you really can’t pay a debt there is an above board and legal way to discharge taht debt. It’s called bankruptcy.

  • Jeanine Skowronski

    Social Security benefits are generally protected from garnishment, unless you are dealing with federal debts.

    Thank you,

    Jeanine

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