Guide

What Happens If You Stop Paying Credit Cards?

What happens if you stop paying credit cards, step by step: late fees, a penalty rate, credit damage, charge-off, collectors and a possible lawsuit.

Updated September 25, 202610 min readReviewed by Netanel Baruch, NFCC-certified credit counselor

On this page

The timeline at a glance
Late fees: the first cost
More than 60 days late: a penalty interest rate
Your credit report: the damage that lasts
Around 180 days: the charge-off
After charge-off: collectors and debt buyers
Can they sue you?
Can you go to jail for not paying a credit card?
Does the debt ever go away?
What to do instead of stopping payments
Call your card company before you miss a payment
Check whether a plan still works at your budget
Talk to a nonprofit credit counselor
Know what debt settlement asks of you
Bottom line
Common questions
Sources

Not sure where to start? Take the Debt Check.About 2 minutes. Rough numbers are fine.

If you stop paying credit cards, the costs pile up in a fairly set order. First come late fees, then possibly a higher penalty interest rate and damage to your credit that can last seven years. At about six months past due, the account is charged off, and it may end up with a debt collector or in court. None of those steps cancels the debt. Below is each step in the usual order, what the law allows at each one, and the cheaper options to try first.

This guide covers what stopping payments leads to. For every way out, from a plan you run yourself to bankruptcy, see how to get out of credit card debt.

The timeline at a glance

When	What can happen
The first missed due date	A late fee, and interest keeps building on the balance
Another late payment within six billing cycles	A higher late fee, still no more than the minimum due
More than 60 days late	A penalty rate on the balance you already owe
Any time you're delinquent	The late payment can go on your credit report, generally for seven years
180 days past due	The bank charges the account off. You still owe it
After charge-off	The creditor collects itself, hires a collector or sells the debt
At any stage, until the time limit runs out	A lawsuit, and after a judgment, possible wage garnishment or a bank account freeze

Card issuers don't all move at the same pace, and state law shapes the later steps. The steps below follow the federal rules.

Late fees: the first cost

Miss a due date and your card company can charge a late fee. The CFPB says the fee generally goes up after a second late payment: if you're late again within the next six billing cycles, the late fee can increase, "but it can never be more than the minimum amount due." The CFPB adds that the amount companies can charge is regulated by law and may vary from year to year. Your statement and cardholder agreement show your card's actual fee.

Interest keeps building on the balance too, so the amount you owe goes up every month you don't pay.

More than 60 days late: a penalty interest rate

A card company generally has to give you 45 days' notice before it raises your rate on new purchases. Rates on the balance you already have are harder to raise. One of the exceptions is a late payment: the issuer can raise the rate on your existing balance when your minimum payment has not been received within 60 days after the due date.

The increase doesn't have to be permanent. The CFPB says that if your rate went up because you were more than 60 days late, the issuer must reinstate your old rate after six consecutive on-time payments of your minimum, counted from when the increase took effect.

Your credit report: the damage that lasts

Missed payments can go on your credit report, and they stay there for years. The CFPB says a delinquency can generally stay on your credit report for up to seven years. That's true of most negative information. Lawsuits and judgments can stay longer.

For an account that goes to collection or gets charged off, the Fair Credit Reporting Act sets when the clock starts. The seven-year period begins at the end of the 180-day period that starts when the delinquency began. In practice, that's about seven and a half years after the missed payment that started it.

We don't give a number of points a missed payment costs. No primary source publishes one, and the effect depends on the rest of your report.

Around 180 days: the charge-off

Banks follow an interagency policy from their federal regulators. Under it, open-end retail loans that become past due 180 cumulative days from the contractual due date should be classified loss and charged off. A credit card is open-end credit. The charge-off should be taken no later than the end of the month in which the 180 days run out.

A charge-off changes the bank's books, not your debt. The OCC says a charge-off is an accounting procedure that does not eliminate your obligation to the bank. Unless the bank forgave or canceled the debt, you still owe the balance, and the charged-off account can be reported for the seven years explained above. Our guide to what a charge-off is explains what it means for your report and for paying or settling the account later.

After charge-off: collectors and debt buyers

According to the CFPB, an original creditor may attempt to collect a past due debt itself, or it may hire a debt collector. It may also sell your debt to another party, which may collect it or pass it to a different collector. So the company contacting you may not be the one that issued your card.

Third-party debt collectors have to follow the Fair Debt Collection Practices Act. A few of the rules:

You get a validation notice. It has to show the creditor's name and the amount owed, and it tells you that you have 30 days to dispute all or part of the debt. After you dispute, the collector can't contact you to collect until it has responded with verification of the debt.
Calls are limited. A collector is presumed to break the law if it calls about a debt more than seven times within a seven-day period, or within seven days after a phone conversation with you about that debt. Collectors are generally barred from contacting you before 8 a.m. or after 9 p.m.
You can ask them to stop. Once a collector gets your letter, it can only contact you to confirm it will stop, or to tell you it plans a specific action, like filing a lawsuit. Stopping contact doesn't cancel the debt.

Can they sue you?

Yes. A creditor or debt buyer can sue over an unpaid card balance as long as the time limit for suing hasn't run out. If you're sued, the CFPB says to respond by the date in the court papers, yourself or through a lawyer. Responding doesn't mean you agree you owe the debt. It means the other side has to prove it.

If you don't respond, the court can enter a default judgment for the amount the creditor or debt collector claims you owe, plus lawful additional fees. Depending on your state's laws, the creditor may then be able to garnish your wages, place a lien against your property or move to freeze funds in your bank account.

Federal law limits what can be taken:

Wages: for an ordinary garnishment, such as a card judgment, the most that can be withheld is the lesser of 25% of your disposable earnings or the amount by which your disposable earnings are greater than 30 times the federal minimum wage. Disposable earnings are what's left after legally required deductions like taxes. When a state's law protects more of your pay, the law resulting in the lower amount of earnings being garnished must be observed.
Federal benefits: Social Security, SSI, VA and certain other federal benefits that are direct deposited are protected. When a garnishment order arrives, the bank has to look back and let you use up to two months of those direct-deposited benefits. Benefits you get by check and deposit yourself don't get that automatic protection.

If you're sued, this is the time to call a consumer or debt defense attorney, or a legal aid office. They can tell you what defenses and exemptions your state allows.

Can you go to jail for not paying a credit card?

No. The CFPB says a debt collector can't threaten to or have you arrested for an unpaid debt, and doing so is harassment under federal law. The exception is a court order. If you're sued and a court orders you to appear or provide information, and you don't, a judge may issue a warrant for your arrest. The same goes for not following a court-ordered payment plan.

A caller who threatens arrest over card debt is breaking the rules, and may be a scammer. The FTC says collectors can't tell you that you'll be arrested, or claim they'll take legal action if it's not true.

Does the debt ever go away?

The debt stays until it's paid, settled or discharged in bankruptcy, but the time to sue over it has a limit. The CFPB says most states have statutes of limitations between three and six years for debts, but some may be longer. After that, a collector can't sue or threaten to sue you. If you're sued anyway, the FTC says to tell the judge that the statute of limitations has run out.

Two cautions. Collectors can still ask you to pay an old debt, and making a partial payment or acknowledging you owe an old debt may restart the time period in some states. And the time limit for suing is separate from the seven-year credit reporting period. Which state's limit applies, and when it started, is a question for a lawyer.

If a creditor forgives part of what you owe, that can be taxable. The IRS says canceled debt is generally taxable, and you may get a Form 1099-C. There are exclusions, including debt canceled in a bankruptcy case and debt canceled to the extent you're insolvent. A tax professional can say how it applies to you.

What to do instead of stopping payments

Each of these costs less than letting an account run through the steps above. They're listed gentlest first.

Call your card company before you miss a payment

If a payment is going to be short, or you've already missed one, the CFPB says to contact your credit card company as soon as possible. Many run loss mitigation programs, sometimes called forbearance or hardship programs. Tell them why you can't pay, what you can pay and when you expect things to change. Get written confirmation of any alternative repayment option you agree to. The hardship letter builder helps you put the request in writing.

Check whether a plan still works at your budget

If you can still pay something every month, see whether it's enough. A payoff plan pays every card its minimum and sends anything extra to one card at a time. If your balances go down at the budget you have, you avoid every step above.

Talk to a nonprofit credit counselor

A counselor at a nonprofit agency reviews your budget and may offer a debt management plan: one monthly payment to the agency, which pays your cards, often at lower rates. The FTC says a plan requires regular, timely payments and can take 48 months or more to complete. The CFPB says a credit counselor can be a way of getting free or low-cost financial advice, but counselors may charge fees for some services, so ask about fees first. Our debt management plan guide covers how plans work and what they cost.

Know what debt settlement asks of you

Debt settlement is the one option built around not paying. The FTC says settlement programs often ask or encourage you to stop sending payments directly to your creditors. That means every step on this page can still happen: late fees and penalties may grow, put you further in the hole, and hurt your credit, and you could even be sued while you're waiting for a settlement. Forgiven amounts can be taxed too. Read debt settlement pros and cons before you sign up with any company.

If none of these can work, a bankruptcy attorney can explain how Chapter 7 and Chapter 13 would apply to you. The pillar guide covers bankruptcy basics.

Bottom line

When you stop paying credit cards, you pay late fees, possibly a penalty rate and years of credit damage. At 180 days the account is charged off, and a collector or lawsuit can follow. The law limits collectors' calls and how much of your pay can be garnished, and nobody can jail you over the debt itself. Calling your card company, running a payoff plan or talking to a nonprofit counselor costs less than any of that. The Debt Check shows which options fit your debts.

Common questions

Can you go to jail for not paying credit card debt?

No. The CFPB says a debt collector can't have you arrested, or threaten to, over an unpaid debt. But if you're sued and ignore a court order to appear or provide information, or don't follow a court-ordered payment plan, a judge may issue a warrant.

When does a credit card company charge off an account?

Under federal banking policy, open-end retail credit such as a credit card should be charged off when it's 180 cumulative days past due, by the end of that month. A charge-off is an accounting step. You still owe the debt, and the creditor or a debt buyer can keep collecting it.

How long do missed credit card payments stay on my credit report?

Most negative information can be reported for seven years. For an account that went to collection or was charged off, the seven years start 180 days after the delinquency began.

Can a credit card company garnish my wages?

Only after it sues you and wins a judgment, and depending on your state's laws. Federal law generally caps an ordinary garnishment at 25% of your disposable earnings, or the amount by which they exceed 30 times the federal minimum wage, whichever is less. Some states protect more.

Is it ever too late to call my card company?

It's best to call before you miss a payment, but the CFPB says to contact your card company as soon as possible even if you already have. Many run hardship programs, and you should get written confirmation of any arrangement you agree to.

Sources

By DebtCheckUSA Editorial Team. First published September 25, 2026. Advertiser disclosure

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