Ask the Get Out of Debt Guy: What Happens If You Stop Making Your Credit Card Payments

Ask-the-Get-Out-of-Debt-GuyHere at ReadyForZero, we’re all about taking a holistic view of your finances. While we want to focus on helping you get out of debt, there are many ways that you can optimize your finances to both get out of debt and build wealth. One of the most important aspects of this is to educate yourself – which is why we cover so many topics on our blog and our resource centers.

But now we’re going to take a step further to make sure that we address everything you need to know in order to optimize for the best financial future possible. How are we going to do this? With the help of our good friend, Steve Rhode! Steve is a well-known debt expert who answers questions on his own website and is now offering help specifically to ReadyForZero users. Read on for today’s topic and answer from Steve!

Today’s question is from someone who recently changed jobs and won’t be able to make two months worth of payments. This person knows that calling the credit card company and explaining the situation is an option, but wants to know if the debt will go to collections if he decides not to pay during this time period. This person also wants to know if he can be sued and wages garnished and, if sued, can he lose his house. Question: What happens if you stop making your credit card payments?

Steve’s Answer to What Happens If You Stop Making Your Credit Card Payments

The fact is unless you can’t come to some mutually agreeable repayment solution with your credit card company they will follow the default process that is laid out in your cardholder agreement. This already includes possibly suing you, trying to garnish your wages, or go after a judgment against you. It does not have to wait to go to an outside agency for that to happen.

A collection agency is an agent for the owner of the debt so the most likely person to sue you is going to be either the original creditor or some entity that buys the bad debt from the original creditor. You would not lose your home over this but it is possible that a judgment could result in a lien against your home. You will not be arrested for a bad debt and you will not go to jail.

But all that being said, nothing great happens from not taking some action to deal with the situation. Unless you start driving this bus you are just waiting to get run over by it.

If you can start making payments after two months and get back on track with the creditor directly then the only thing that will probably happen here is you will have a two month period of delinquent payments that appear on your credit report for the next seven years. An unfortunate but not horrible thing. It’s far better than being poked in the eye with a sharp stick.

Just call your credit card company, be polite, tell them the situation, try to enlist their cooperation in a friendly way and work out a payment solution with them when you can after the two months. If you do this, my bet is things won’t be horrible for you and your fears will be unfounded. I also doubt you would have been sued or even sent to outside collections by that time.

But, as I warned, if you hide from the creditor and don’t communicate it can be worse.

Finally, make sure you do not agree to a repayment plan you can’t afford when you start making payments again after a couple of months. The irony is that if you are two months behind you will have finally made it to the department that will be able to offer you special internal repayment programs. Take a deep breathe and work this plan and things will be fine.

The opinions stated in these posts are solely the opinions of Steve Rhode, not of ReadyForZero. Are you interested in asking your own question for Steve? Send me an email directly at and use the subject line, “My Money Question”. If you’re more into social media than email, write your question on our Facebook wall or send us a tweet – don’t forget to include the hashtag, #mymoneyquestion!

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  • John S @ Frugal Rules

    Good post! Communication is key when you’re running into problems. I tried avoiding the cc companies when I was in debt and it just made the situation much worse. It might not always work out for you, but you’ll generally get much farther if you’re honest with them.

    • Shannon_ReadyForZero

      Thanks John and you’re absolutely right! Communication is key, ignoring the issue won’t make it go away. I appreciate you sharing this experience with us!