What happens when you stop making credit card payments?

Whether the reason is a layoff, a medical emergency or a pile of debt that is more than you can afford, struggling to pay credit card bills is a problem many people face. When you quit making credit card payments, you can be charged late fees and higher interest rates and take a hit on your credit.

What happens to debt owed to a credit card company?

A debt owed to the credit card company is an asset of the credit card company, and like any other asset, the creditor can sell the debt to a third party (such as a collection agency), which can then collect the debt from you.

What happens if you have a 90 day late payment on your credit?

If this happens, the debt collector will reach out to you about the overdue payments. In addition to charging fees and penalties, the card issuer at this point might lower your credit limit, as could other card issuers that have spotted the 90-day late payment on your credit report.

What causes a credit card company to close an account?

Credit card companies have many other reasons for credit card closure. Common reasons that may prompt a credit card issuer to cancel your account include: Inactivity with a zero balance for several months. A drop in your credit score, especially due to late payments to other companies.

What happens when you stop paying on a credit card?

The Credit Card Company Considers You “Uncollectible”and Writes Off the Debt. If you stop paying on your credit card debt and become seriously delinquent, the credit card company will likely write off the debt and consider you uncollectible. At that point, the company takes your debt off it’s books.

A debt owed to the credit card company is an asset of the credit card company, and like any other asset, the creditor can sell the debt to a third party (such as a collection agency), which can then collect the debt from you.

If this happens, the debt collector will reach out to you about the overdue payments. In addition to charging fees and penalties, the card issuer at this point might lower your credit limit, as could other card issuers that have spotted the 90-day late payment on your credit report.

When do you cut up your credit cards?

Cut up your credit cards once they are maxed out and you know you are ready to stop paying them. The credit card companies will cancel them for you once the payment is several months late, but it is easier for you not to look at them.