If I Stop Paying My Credit Card Debt, What Happens?

September 1st, 2010 | Posted in Credit Card Debt

As an Orlando bankruptcy lawyer, one of the first things I advise my clients to do when they decide they are filing bankruptcy and hire me is to stop paying on their credit cards. Recently, though, before I could offer that advice, a client asked me: “What happens when I stop paying my credit cards?”

The answer? Your credit card company will begin the collection process, which normally proceeds in this manner:

1. You will receive frequent phone calls from the original creditor, as will your family and your employer, attempting to convince you to make a payment over the phone. The collection agent will try to intimidate you, by saying they will ruin your financial life unless you pay up.

2. Once the initial creditor believes they cannot convince you to make a payment, usually after 90 or so days, they will sell your account to a third party collection agency. This collection agency will then proceed with the actions listed above.

3. Then, around 180 days from the time you stop making payments, you may hear from an attorney. This attorney will simply try to collect on the debt, following the same protocol in 1 and 2 above.

4. At this point, the attorney might file a lawsuit, seeking a judgment against you. A judgment would permit the creditor to collect from you through a wage garnishment. Your wages cannot be garnished without a judgment.

Seems like a long, drawn out process doesn’t it? By my calculation, more than six months from the time payments have stopped until a judgment is entered against you. Now the question is, “Why?” Why would I advise my clients when they hire me as their bankruptcy lawyer, to stop making credit card payments?

Because the idea is for my client to be filing bankruptcy sometime well before the judgment is entered. Garnishment is taken out of the equation. This way, my client uses the payments they would have made to an abusive debt collector, for a credit card debt, to catch up on a car payment or a house payment they want to keep through filing bankruptcy, or to start building that safety net their Orlando bankruptcy lawyer advocates creating as part of your fresh start strategy when filing bankruptcy.

But what about those malicious debt collection agents? Here in Florida, we have some of the toughest laws in the country to protect consumers from the abuses collectors use regularly when attempting to get my clients to pay their credit card debts. Additionally, a Federal Law also restricts those abusive acts by third party collection agents in an attempt to collect on a debt. Why not sue your creditors to enforce your rights?

Collection agents and the whole debt collection process can be an intimidating one. Don’t let it be! As long as you know your rights and how the system works, the empty threats thrown at you on a call from a debt collector will seem as foolish and absurd as they really are; and in most cases actionable in court.

Get the Free eCourse to find out how an experienced bankruptcy lawyer to assist you in successfully navigating the debt collection process and help you achieve that fresh start you’ve been craving.