If I Stop Paying My Credit Card Debt, What Happens?
Recently, I was speaking to someone for their free legal evaluation and they asked me, “If I stop paying my credit cards, what will happen?” As an Orlando bankruptcy lawyer, among the first things I advise my clients when they decide they should file bankruptcy and hire me to represent them, is to stop making credit card payments.
The short answer is, the collection process will begin. It usually goes something like this:
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. After 90 days or so, the account will be sold to a third party debt collector who will repeat the actions listed directly above.
3. Approximately 90 days later, (180 after you originally stopped making your payments), an collection attorney may be giving you a call to try and get you to pay on the debt and follow steps 1 and 2 listed 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.
Seems like a long, drawn out process doesn’t it? By my calculation, more than six months from the time payments have stopped until a judgment is entered against you. Now the question is, “Why?” Why would I advise my clients when they hire me as their bankruptcy lawyer, to stop making credit card payments?
You see, the objective is for my client’s bankruptcy to be filed well prior to a judgment being entered against them. As long as no judgment is entered, garnishment is not possible. Now, my client can catch up on car or house payments, for those secured debts they intend to keep through filing bankruptcy. They are not wasting that money on payments to malicious debt collectors, for credit card debts that will be discharged in their bankruptcy. They can also use the money they have saved to create that safety net, which I advocate as their Orlando bankruptcy lawyer, to be used as part of an overall, start fresh, strategy when filing for 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.
Collection agents and the whole debt collection process can be an intimidating one. Don’t let it be! As long as you know your rights and how the system works, the empty threats thrown at you on a call from a debt collector will seem as foolish and absurd as they really are; and in most cases actionable in court.
Check out my Free eCourse to learn more about how an experienced bankruptcy lawyer can help successfully navigate you through the debt collection process and help you get a fresh start financially.