What Can They Do to Me if I Stop Making Credit Card Payments?

11 Feb What Can They Do to Me if I Stop Making Credit Card Payments?

Have you joined the company of millions of other Americans who can no longer keep up with minimum credit card payments? Once you default, what can happen to you?

First of all, as long as you have not engaged in some brand of fraudulent conduct, you will not be headed to prison. The inability to continue paying your credit card bills is not criminal conduct under our system of justice. Debtor’s prisons in England were long ago abolished. I know that for many of my clients, when they understand that this is strictly a civil matter, they are able to breath a sigh of relief.

Here is a quick list of things to keep in mind about the consequences of defaulting on your credit cards:

  1. Your credit score will suffer, particularly if the defaulted account is “charged off” by the issuing bank. A “charge off” is an accounting term used by credit card companies and usually occurs approximately six months following default. If at all possible, you should consider filing a bankruptcy case before your debt is “charged off”.
  2. You will receive verbal demands for payment by telephone and written demands for payment by mail. You may even hear from debt collection companies like Wolpoff and Abramson. You should consult an attorney to find out whether these debt collectors are respecting your rights.
  3. The worst thing that can happen is that you may be sued by either the original credit issuer or by an assignee of the debt. If this happens, you should immediately see an attorney. In this context, the rights of the creditor and/or assignee vary greatly from state to state. In some cases, you may be able to successfully defend against the lawsuit. In other cases, if a judgment is obtained against you, the judgment holder may be able to freeze your bank accounts, garnish a percentage of your wages, place a lien on your home, etc.

The one thing you should have in the back of your mind is that bankruptcy can offer a “way out”. In most cases, as soon as you file a bankruptcy case, you (and in some cases, your co-signers) receive the benefit of the Automatic Stay. Even if you file your bankruptcy case after the creditor or debt collector has obtained a judgment against you, your bankruptcy attorney may be able to help you avoid any resulting judgment liens on your property by taking advantage of certain safeguards afforded to consumers within the United States Bankruptcy Code.

The bottom line: you should seek the counsel of a bankruptcy attorney early and often when you discover that you are among the millions of Americans who can no longer keep up with their credit card payments.

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