Stopping your credit card payments is always an option if you are deeply in credit card debt, but you should be aware of the possible consequences. Just because do not have the cash to pay off your credit card bills does not necessarily mean credit card companies will not find other ways to get back the money they say you owe.
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Reducing your debt is safer than ignoring it altogether, and you may be able to find credit cards that help with that reduction.
How long until companies go after me?
Credit card companies usually wait about six months, or 180 days, before they start to take action, according to MSN Money. Their first action is usually referring your past due account to their collections department or a collections agency.
Compared to other companies or debts you may owe, credit card collectors have a somewhat generous time period before they take action on past due accounts. Mortgage companies, for instance, typically wait between three and four months before they start to take action and auto loan collectors have been known to come after past due accounts that are only one day late.
What the collection agency or department does depends on how aggressive each particular collector is. They may call or send you past due notices for several months. Their last course of action is to file a lawsuit against you.
What happens with a lawsuit?
If the collection agency or department files a lawsuit against you for the credit card debt you owe, you will be notified by mail with official documentation. You then have several options you can pursue to clear the debt.
- The Federal Trade Commission recommends responding to the lawsuit, even if you do not think you owe the amount due or have no way to pay it.
- Responding to the credit card lawsuit helps to keep your rights intact when or if you decide to fight the lawsuit in court. The paperwork comes with instructions on how to respond to the suit and the due date for your response.
- Hiring a lawyer to respond is an option, although you may find it more economically feasible to respond to the lawsuit yourself.
- Another course of action is paying off the credit card debt using a credit card debt calculator the collectors say you owe, although they may want a single payment for all monies past due.
- If you are able to borrow or somehow raise the money to pay them off, you may try negotiating with them to at least reduce or eliminate some of the past due interest fees.
- Ignoring the paperwork and the lawsuit is always a possible response, although this option can result in you losing the lawsuit by default and having your assets seized.
What can the credit card companies seize?
The credit card companies and collectors themselves cannot seize your vehicle, home or other property and wages, but they may get their hands on such things if they win the lawsuit against you. Once a judgment is in place saying that you owe money, the collection agency or credit card companies have leverage to get the money from you through various avenues.
They may obtain a garnishment order issued to your bank or mortgage company so they may receive compensation in the form of funds from your bank account or property. They can also obtain a court order that is issued to your employer so part of your wages can be withheld to pay off your debts.
What can’t they touch?
Although your wages, home, and car may be fair game for seizure in credit card lawsuits, credit card companies and collection agencies cannot go after a number of other income sources.
These include income coming from the federal government, including:
- Social Security benefits
- Supplemental Social Security benefits
- Veterans’ benefits
- Civil service benefits
Your retirement benefits and disability benefits are also safe, as is pay coming in from federal student assistance or being in the military.
Military annuities and benefits for military family survivors are exempt, as are wages from being a merchant seaman. Retirement benefits from working on the railroad and death and disability benefits from longshoremen, harbor workers, and foreign service members are likewise exempt.
Creditors cannot go after disaster-relief funds you are receiving through the Federal Emergency Management Agency or compensation you’re receiving as compensation for the death, injury or detention of U.S. contracted employees working outside of the U.S.
Reducing and paying off your debt remains safer than simply ignoring it and specific credit cards may be able to help.
Use our credit card finder to compare credit cards with balance transfer or low interest options that may work for you.