What Can Credit Card Companies Do If I Stop Paying My Credit Card Debt?

As a 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?”

Once you stop making credit card payments, the collection process will start. Collections normally progress as follows:

1. The original creditor will call you, your family, your place of employment, non-stop for about 60-90 days trying to get you to pay something over the phone and making all kinds of threats about how they are going to ruin you financially unless you pay them.

2. In about 90 days, your original creditor will give up and sell your account to a debt collector. This third party agency will then repeat the actions above.

3. After about 180 days since you stopped paying, you may get a call from an attorney trying to collect on the debt who will repeat the actions listed 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.

So, by my estimation, it has been at least 6 months since the last payment was made. Takes a bit of time for a judgment to be obtained. Then, how come, when a client hires me as their bankruptcy lawyer, do I tell them they should stop making their 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.

As for those rude and abusive debt collectors, why not sue them? You see, here in Florida, we have some of the toughest laws in the country to protect consumers. These laws are intended to protect you from the abuse described above, which debt collectors use on a regular basis to coerce you into paying your debt. Aside from the Florida laws, there is also a Federal Law which prohibits third party debt collectors from those same abusive acts. To enforce your rights, you can sue your creditors.

The debt collection process can be an intimidating experience, or an empowering one. If you know how it works and you know your rights, the empty threats the debt collectors hurl at you in a typical phone call from them will seem laughable, and more often than not, actionable.

To learn more about how an experienced bankruptcy lawyer can guide you through the collection process and assist you in getting a fresh start financially, try my Free eCourse.

The Pros and Cons of Bankruptcy

If you are considering bankruptcy, you should research all aspects of the process and the possible outcomes. This article is meant to be a very brief summary of the pros and cons of bankruptcy.

As it becomes increasingly difficult to make ends meet, many people begin to think that bankruptcy may be a good idea. Before jumping into a decision like this, though, you should research what bankruptcy really is.

When you file a legal proceeding to have your debt discharged (Chapter 7) or to reorganize your finances (Chapter 13), you have filed a bankruptcy proceeding. A bankruptcy filing is normally done voluntarily and because the debtor is having trouble paying his creditors.

Essentially, people consider bankruptcy so they can start fresh. Once the bankruptcy is completed, the person will be able to start over with no harassing phone calls and knowing that he can live within his means.

We need to clear up some common and erroneous ideas related to bankruptcy. Some people believe that filing bankruptcy will cause you to lose your job. This should not be the case. Additionally, some people, probably the same people, believe that you will lose your social security benefits if you file bankruptcy. Again, this should not be the case. Lastly, there are those who believe that your credit report will be so damaged that it will never be the same again. It is true that your credit score will take an instantaneous hit by filing bankruptcy, however, with time and diligence, it can be repaired.

The major issue with declaring bankruptcy is that your credit score will be dramatically affected and will instantly plummet hundreds of points. Because of this, you will likely be denied for all credit products for several years, possibly up to ten years.

Something else to keep in mind is that, depending on the bankruptcy chapter filed, some of the debtor’s assets may be lost in order to pay creditors. However, some assets are exempt, thankfully. You should discuss the different chapters of bankruptcy and the possible outcomes when you meet with a bankruptcy attorney.

Another thing to consider is the cost involved. When you file a case in the Bankruptcy court, you will be required to pay a filing fee. In addition to this, there are attorney’s fees which can run $2,000 or more. Therefore, if your total debt is only a few thousand dollars, it would behoove you to consider working with your creditors to arrange a payment plan rather than considering bankruptcy.

Professional counsel from an experienced bankruptcy attorney should be sought if your are thinking about bankruptcy. A seasoned bankruptcy expert can guide you through the process and give you an idea of the expected outcome.

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