Stop Paying Credit Card Debt: Your Legal Options Explained

Many people carry credit card debt from month to month. Most can’t fully settle balances before high interest kicks in. Consequently, you end up living and working just to pay credit card bills.

The cycle is stressful and keeps you trapped. If that sounds familiar, you need to know your options for breaking free.

Why Credit Card Debt Is So Hard to Clear

You might commit to paying your credit card debts every month. But unless you clear all outstanding balances, you’ll never pay it off.

It feels good to see the reduced balance when you make a payment. However, that feeling lasts only until the credit company charges another interest.

Before you know it, your new credit card debt shoots back up. It may even be higher than before you made your payment.

On the other hand, waiting until you can make a lump-sum payment hurts your credit score. Credit card debts become a trap that’s difficult to escape.

Credit companies push you to pay your debt to save your credit score. While that may work, it takes you back to square one. You don’t have money, but you have a good credit score.

You might be tempted to use credit cards again. That mindset will keep you imprisoned in the debt cycle. You need to change it to find freedom.

How to Pay Off Credit Card Debt Faster

The best option to clear your credit debts is to pay them off. How to do it is the tricky part.

If you have multiple credit cards with debts, follow these steps:

First, know your numbers. Find out how much you owe each credit card company. Write down the interest rate charged on each card.

Next, arrange the credit debts from highest to lowest interest rates. Start paying off each debt from the highest interest rate down.

Remember, higher interest rates mean higher debt.

One helpful tip: reduce your expenses where possible. Cutting unnecessary spending helps you save money for credit card bills.

Consider getting an additional source of income. Extra money helps you pay off debts faster.

Other Ways to Get Rid of Credit Card Debt

You can decide to pay your credit card payments every month. But this option may never get you out of the debt cycle.

Your credit score will be unstable. It depends on what you owe and how often you make payments.

If your interest rates are high and you’re struggling, negotiate with your credit card company. There’s no guarantee they’ll grant a lower interest rate. But negotiation is a great starting point for a debt settlement plan.

You may agree with your credit company to work out a settlement. The company will pay off your debt with monthly installments. The downside is you can’t continue using the credit card. The amount you’ll pay back will be higher than what you owe.

When to Stop Paying Your Credit Card Debt

If you’re late on payments and can no longer afford to catch up, you may need to stop. After that, debt collectors will review your case.

Many people avoid this option. They worry about credit scores, debt stigma, and unending phone calls. But it makes sense when your credit card is maxed out. You can only afford minimal payments to the card.

If you forfeit payment for several months, the credit company may close your credit line. They’ll keep persuading you to make payments. Eventually, they’ll forward your information to debt collectors.

Credit companies charge off bad debts. Most of the time, these debts get sold cheaply to debt collectors.

At this point, the credit card company lists you among debt defaulters. The credit report doesn’t change even when you finally pay off the debt.

Debt collectors are often harsh. They may even threaten to take legal action against you. The good news is that the Fair Debt Collection Practices Act protects you from harassment.

Each state has statutory laws limiting the time frame when a collector can sue you. You may approach collectors and negotiate to clear the debt for less.

The agreement must be done in writing. Make sure the debt is omitted from your credit report. You may also wait up to seven years before your debt is removed.

If you’re feeling overwhelmed by unpaid credit card bills, take a step back. You have options available to address and resolve your debts. There are even ways to stop paying credit cards legally.

How to Stop Paying Credit Cards Legally

You have two legal options: debt settlement or bankruptcy.

Debt Settlement

Debt settlement means clearing your debt with a one-time payment. You pay less than what you owe.

Usually, companies specialize in debt settlement or attorneys who focus on this area handle it. The aim is to reduce your debt load. You work out more favorable terms with creditors.

Settling your debt is a great way to legally stop paying credit cards. It typically involves a one-time, lump-sum payment. You clear your name of the debt for good.

If you’re facing a lawsuit over credit card debt, our partner Solo can help you respond and negotiate a settlement.

Bankruptcy

Bankruptcy is another legal option that can help you stop paying credit cards. It helps individuals and businesses that can’t afford to pay off debts.

Bankruptcy evaluates and uses your assets to pay off outstanding debts. Even though bankruptcy offers a fresh start, it has significant long-term consequences. It particularly affects your credit score.

Bankruptcy is often seen as a last resort debt solution. You should explore all other options first.

What Happens If I Stop Paying Credit Cards?

If you stop paying your credit card, your creditor will contact you immediately. They’ll remind you to take action and make a payment.

After 30 days, the creditor marks your account as delinquent. An internal collections department may reach out to you.

After you stop paying for about two months, the creditor reports the delinquent account. The report goes to the credit bureaus.

Finally, your account will be charged-off after 120-180 days. A charge-off means your account has been marked as a loss. It’s usually transferred or sold to a third-party collection agency.

At this stage, the collector will contact you. They’ll try their best to get you to pay.

If you never respond to the debt collector, you’ll likely get sued. Fortunately, you can still settle a debt even after being sued.

Protect Your Rights When Collectors Come Calling

Debt collectors can be aggressive and intimidating. They may threaten legal action or harass you with constant calls.

The Fair Debt Collection Practices Act protects you from abusive tactics. Collectors cannot harass, oppress, or abuse you. They cannot lie or use unfair practices.

If a collector violates your rights, document everything. Keep records of all communications. You can file a complaint with the Consumer Financial Protection Bureau.

If you receive a lawsuit, don’t ignore it. Responding is crucial to protecting your rights. Our partner Solo can help you file a proper response to any debt collection lawsuit.

Your Path Forward

Credit card debt can feel overwhelming and inescapable. But you have more power than you think.

You can negotiate with creditors. You can explore debt settlement options. You can even consider bankruptcy if necessary.

The key is taking action instead of ignoring the problem. Each day you wait, interest accumulates. Your options may become more limited.

Start by assessing your total debt. Prioritize by interest rate. Cut unnecessary expenses. Consider additional income sources.

If you’re already facing legal action, don’t panic. You still have rights and options. Responding to a lawsuit is your first critical step.

You can break free from the credit card debt cycle. It takes planning, discipline, and sometimes professional help. But financial freedom is possible.