What would happen if you didn't pay credit card companies?

Are there legal ramifications? What if you can't afford to pay anymore?

I am a certified credit counselor and would like to answer your questions.

If you can not pay your credit cards a few things will start to happen.

1. The credit card companies will report as late.

2. If you do not pay them they will begin internal collections and begin to call you.

- If this happens there are laws to protect you from harrasement. They can only call through reasonable hours, the creditors must assume that calls before 8am and after 9pm are inconvenient.
- They can not call you at work, if they do state that your place of employment prohibits such calls, it is better to put it in writing and send it certified.
- They can not call third parties about your debt.

If any of this happens you can file a complaint with the FTC and your state, either way the call at work stop.

3. If the credit cards can not collect they will send your account to an outside collections agency. Once sent there your protected under the Fair Debt Collections Practices Act. (FDCPA).

At this point the collections will try to collect or settle. If they fail to do this than there can be legal ramifications.

Legal ramifications may include a few things.
1. You will be served with papers to appear before court. If this happens DO NOT IGNORE the summons, file a response, and show up, if you do not the creditor will win automatically.

2. The creditor will get a judgement which means they can garnish your wages- your state law may or may not allow this- if they due they can garnish upto 25% of your pay. They can also get permission to put a lien on your checking or savings account. If this happens any money you put in will be taken.

If you can not afford to make the payments there things that you can do.

1. Ask family for help to pay the debt.

2. Maybe get a loan, but chances you will be denied or interest rate will be to high.

3. Talk to the credit card companies Sometimes they will have hardship programs that are available.

4. Get on a Debt management program (something I could help with). These programs may lower your monthly payment, lower interest rates, stop calls, make one payment and help you get on your feet. However it is not for everyone and there are things you should be aware of.

a. It will be on your credit report, only while your on the plan, if stays longer you make a request to have it removed and they remove it.
b. You may not be able to get loans and credit cards while you are on the program.
c. For the first 3 or so months you may get late fees and over the limit fees, keep in mind creditors can and do go back in time to eliminate fees.
d. Your payments may change for the first 3 payments
There are no guarentees.

5. You can try to settle the accounts. To settle account the credit card companies assume they can not get the full amount back. Things to be aware of:

1. Settlements can stay on your report for 7 years and will show as settled account, not paid as agreed.
2. Under current IRS regulations if you save 600.00 or mre on a settled debt you will be taxed, it is ordinary income.
3. Often times when companies settle accounts they merely sell it to another company will then try to collect it at a later date.
4. Companies that do this will not pay your bills every month, they will hold it until there is enough, but the take their fees first. during this time the chances of a lawsuit are huge.
If you do this option do not pay anyone to do it, save the money make the agreement yourself. Below are a few books I recommend you look through, they will help you write the letters that are necessary.
6. Bankruptcy may be an option.

Whatever you decided do your homework. You may also want to write letters to the credit cards stating that you can not make the payments and you intend to resume payments when your back on your feet. The following are good books.

Money troubles by NOLO
Credit Repair by NOLO

If you have any questions feel free to email me at hanketroy@yahoo.com or call 1-888-282-5494 Ext 2120

If you have low interest rate than a debt management program is not something that would be in your best interest to do.

When you sign up for a credit card, and you sign that application, you are signing a legally binding document.

Basically, you enter into a contract to pay everything you charge, and pay in accordance with their fee schedules and interest rate charges.

If you cannot pay anymore, the solution is NOT to stop paying. They will report you to the credit bureaus. Once your credit is blemished, it takes a near miracle to fix it...or 7-10 years AFTER the balance is paid to repair it.

Nowadays you can't get cell phones, car insurance and even some jobs without having good credit. My suggestion is to call the credit card companies, tell them your situation. They may offer you a "settlement" or a "charge off". For them, some money is better than no money. If they really wanted to, they could take you to court for the goods you purchased and didn't pay for.

I only know all of this because I ruined my credit when I was 18, I am 26 now, haven't been late on a bill since I was 18 and still have terrible credit.

Be careful, and good luck

Assign you to a collection agency, ruin your credit, file for a judgement agains property and in some states garnish your paycheck/attach your wages; and YOU get to pay all the extra costs and interest to boot!

The send you to a collection agency, and it's a bad mark on your credit. If you ever want to get a mortgage you will have to square it up. It takes a long time to get it off your credit report (5 years). It would be better to call them and try to make a payment arrangement. They may stop your interest or at least lower it considerably and give you a lower minimum payment. It would be better to try to work with them before simply not paying.

make your credit look bad, and if u cant afford to make payments then pay something

taker07 must be one of those bottom feeding bill collectors. along with a couple of your other respondants. whats the matter boys? nobody answereing their phones? nothing better to do on company time? get a real job. go out get dirty trying to make a living. any 10 yr old could sit behind an automated dialer waiting for somebody to answere so you can talk $hit. word is most of you are drug using ex-cons. the collections business aint to picky bout who they hire. check out their turnover rate.

you file bankruptcy and stick them with the debt. then in about a year you start over.....

this article i ran into the other day gives you the difference between credit card and debit card.
http://creditgoddess.wordpress.com/2007/03/30/credit-cards-vs-debit-cards/

nothing,really bad, but it will go on your credit rating.

if you cannot afford to pay anymore and are in way over your head...file bankrupcy. they can sue you, they can garnish your wages...unless you start bankrupcy proceedings...

i tried doing it right thur a credit agency thing when my credit was not so bad, but i felt i needed to get those cards paid off sooner rather than later...they made some payments, didn't make others...didn't negotiate the interest rates and such...and i was in worse shape than when i started when I was done with it a year and a half later (went in owing $10K, when they were "done" with me, I owed over $24K because of late fees and having my interest rates raised, most from 10% up to 24% because they negotiated on my "behalf".)

Just be careful whatever you do and know ahead of time what you are getting into.

That would mean that you would be defaulting on your contract with the credit card companies. This will lead to them reporting you as late to the credit bureaus and if you still do not pay, they will turn you over to a collection agency and they will hound you for years. Eventually they will take you to court and get a judgment against you and then they can garnish your wages and attach bank accounts and any property you have to settle the debt.

This is a long process and your credit will be trashed for years and years. 7-years after you pay the debt.

You should consider calling Consumer Credit Counseling Services, they are a free service and will work with your creditors to lower your monthly payment as well as your interest rate. I used them several years ago and was debt free in 36-months.

They will have collections bug you. Possibly call relatives asking for your number. Send you lots of letters. This damage your credit. They can try to sell your debt and try to recollect for up to about 8 years.

They have the right to sue you to garnish your wages. Although I have never heard of this for a small line of credit - under 5-10k.

Only bancruptcy will quickly remove the debt.

You would really mess up your credit. If you can't afford to pay then I suggest you look into filing bankruptcy to assist with your problem.

you are then, in Death. but, you'll have to get a job, or start paying, another way is bankruptcy. but that's not the best way to go. ask for some information online!

They will put a lien on your property, send to collection agency and ruin your credit. If unable to make payments - call credit card company and set up a pay schedule with them. They will work with you.

well what will happen is that your unpaid debt will go to a credit bureau

You should work out a payment plan. If you can't come to an agreement with them, they have options that would turn ugly for you if you don't declare bankruptcy. Finding a way to pay them off is much better than bankruptcy or simply not paying. There are credit counseling services that will help with this, but read the fine print before signing up--some have excessive fees.

Now, to answer your question. If you don't pay, they'll sue. Since you don't have a defense (you do owe the money), there is no point in going to court. They will get a judgment by default since you aren't going to fight the debt. (If you showed up to court, the result would be the same, unless you feel and can give evidence that the debt isn't yours.) The judgment shows up on your credit report. Once they have a court order demanding that you pay it, they can get garnishments against your bank account and job. If your debt is extreme enough, they can start a bankruptcy case for you against your will.

So pay it off. If you don't, you will have to change jobs every six months or whenever they catch up and figure out where you work, and you'll have to live without banks, because any time you put money in a bank, if the creditor searches for your bank account and finds it, they can freeze all the funds, and take most of them (there are limits and exemptions to what they can take, but your funds are frozen while you wait to go to court to explain that that is rent money, etc.) It can turn into seriously bad news. If you think your credit is shot now, just wait until it gets to that point. People won't even want to rent a house to you.

Just because you "can't afford to pay anymore", does that mean you don't owe the money? If I borrowed $100 from you and promised I would pay it back, but then decided I "couldn't afford to pay you anymore", does that mean you would let me off?

Get a grip. If you owe money, you have to find a way to pay it...

If you can correctly spell and use the word "ramifications", you are smart enough to get an extra job to pay back the money you borrowed!

Well, first of all u will be blacklisted as a bad credit payer so you won't be able to receive bank loans or get credit cards for the rest of your life. The credit company will be issued with permission to seize your possessions to make up for the loan that you haven't paid. You may end up in jail if you have numerious outstanding credits. Yes, everything leads to really bad situations so the best thing to do is not listen to all the amazing ads on TV that credit companies promote and always be sure before you use credit cards that you will be able to pay them back!

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