What If I Were To Stop Making Credit Card Payments

2015-01-21   minute read

Rob Shier

Lifestyle Debt

Are you in financial trouble? Are you worried about what will happen if you stop making credit card payments? Call the experts today for a free consultation

The first six months that your credit card payments are overdue 

For the first six months that you do not make any payments, your credit card company will have its in-house collection department make payment demands to you—both over the phone and in writing. Furthermore, your creditor might hire a lawyer to simply send a generic mass-produced letter to you demanding payment of your outstanding account. As a general rule, creditors do not sue consumers during the first six months that an account is overdue.   

What happens when your credit card payments are six months overdue? If you have not made a payment on your credit card for six months then your credit card company essentially has four options and will do one of the following:

  • Continue collection efforts using its in-house collection department
  • Assign your file to a collection agency for collection on a commission basis
  • Arrange to sue you
  • Sell your outstanding account to a debt buyer

In some instances, your creditor might choose one option and, if your account remains unpaid after several months or years, it might choose another option. For example, your creditor might assign your account for collection to a collection agency and after a period of months or years it might then sell your account to a debt buyer. 

Creditors cherry pick the files they want to sue 

Your credit card company will have hundreds of thousands of cardholders who have not made a payment for six months. It is not cost-effective for your credit card company to sue all these people. A credit card company will typically review its inventory of accounts which are six months in default and cherry pick a very small percentage of them to be sued. With a few exceptions, those files which are not selected for a lawsuit are going to be assigned to a collection agency for collection on a commission basis. Click here to read a blog titled “Nine Reasons Why You Might Never Be Sued”. 

What do collection agencies do? 

Collection agencies are companies which collect debts on behalf of others. Collection agencies engage in three primary activities:

  • Locating debtors
  • Making written payment demands to debtors
  • Making payment demands to debtors over the telephone

Collection agencies might hire a lawyer to send out a generic mass-produced letter demanding payment of your account on behalf of a collection agency. As a general rule, collection agencies are not in the business of suing consumers. Collection agencies typically work on commission. If you don’t make a payment on your outstanding credit card then the collection agency does not earn a penny in fees for its work! 

What will your credit card company do when it wants to sue you?

If your credit card company wants to sue you then it is very unlikely that your account will be placed for collection with a collection agency on a commission basis. Instead, your credit card company will likely do one of the following:

  • Sue you using its in-house legal department
  • Hire a law firm located in your province to sue you
  • Hire a paralegal located in your province to sue you

Your account might be sold 

Your credit card company has the right to sell your account to another company who will then step into the seller’s shoes and have all the rights of your credit card company. There are two different types of debt buyers:

  • Collection agencies (primary business activity is collecting debts owed to others)
  • Debt buyers (companies that do not collect debts owing to other firms)

When it comes to the options available to a debt buyer that has purchased your outstanding credit card debt, it can do anything your credit card company could do.  This includes collecting the monies using its own staff, suing you, farming it out to a collection agency, or selling your debt.

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