What happens if you don't pay your Credit Cards

Credit card is an indispensable part of someone’s life especially is top tier countries like the USA and with a lot of credit cards comes to a lot of defaulters (people who didn’t pay the bill) 

Just in the USA, the defaulter’s stat is 2.4% nationwide.

So In this article we will explain to you what happens If you stop paying Credit Cards Balance on time.

So if you are one of them no need to be afraid of it. It can happen to almost anyone and depending upon the time (passed months) various actions can take place with you.

For ex If it has been 60 days till you paid the credit card bill, then your interest could increase and you will have a mark on your credit rating which can last very long and you will need to pay a late fee as well.

So depending upon the time a chain of events might be happening to you and in this blog post, we will explain what happens after each missed payment of your credit card.

If you are a Month Behind i.e. One Missed Payment

  • You might need to pay a late fee which can be around 27$ and also your interest rate might rank up.
  • Loss of introductory Apr i.e. your card issuer can revoke your introductory APR 
  • Penalty APR can be charged to you depending upon your agreement
  • Your account can be (not necessarily reported after just one missed payment) reported to the credit bureaus as delinquent i.e. someone who failed to make the payment
  • Your Credit Score will affect and once it is reported to the credit bureau then it can stay up to 7 yrs on your credit report.

Note that when and how much to increase interest rate depends upon the card issuer.

Now after the 60-day Window has passed i.e You have missed Two payments

  • Your credit rating will have a permanent scar on it which can last up to 7 years
  • Your account will be reported to the credit bureaus
  • Your late fee will increase up to 38$ 
  • They will block you from the new purchase

Note that your credit card issuer needs to give you a 45-day window to increase your interest rate on your current balance. If you pay before than 45 day period you will avoid the penalty.

By the way, you will now be receiving annoying calls from people to pay your credit card debt.

3 months Passed i.e. 3 missed payments

  • You would be having a few hundred dollars as late fees in your account + the interest accumulated over a period of time.
  • Your account is definitely reported to the credit bureau by now
  • You will be contacted by credit card issuers agency for collecting payment and will be giving you different ways to pay the amount.

4 months past i.e. 4 missed payments

  • Your account will be sent to a collection agency by now because there is no hope that you will pay back by now
  • Your credit score has taken a direct hit by now and you are unlikely to be getting any benefits that come with good credit rating like new credit cards, loans, buying or renting cars, etc.
  • You will receive the form 1099C from IRS regarding your debt informing you that you will need to pay tax on that canceled debt i.e.  if the card issuer or debt collector cancels more than 600$ of debt then you will need to pay tax on that canceled debt amount. For ex If you have 50k$ of debt and the agency cancels 5k$ of debt then you need to pay tax on 5k$ to IRS
  • In worst cases card issuer can also file a lawsuit in order to extract the money and in that case you will definitely need to pay it and if you do t have the money to pay it then in order to do that you will need to provide it from your wage and if you even cannot do that then you will need to file bankruptcy.

Note: The Collection agency also has some limitations when it comes to collecting a debt as they cannot threaten, harass or make false statements to you to collect the debt.

Now lest coming to some of the faqs like

What happens if you die without paying your Credit Card Debt ?

If you have credit card debt on you and you die unfortunately then the debt is transferred to the immediate co-owner of the account of the spouse or the the deceased person’s estate and your death will be reported to the credit card issuer and they will stop any late fees fine to your debt .

Now Debt will be transferred to your spouse only if you live in a community property state including Arizona, California, Idaho, Luciana, Nevada, New Mexico, texas, Washington, Wisconsin and Alaska

If the debt is transferred to the state then it is responsibility of the executive of the administrator to liquidate all the property and assets to pay the credit card debt and if the estate is worth less than what it is Owed in debt then the debt owners have no way to collect the full debt.

What happens to your credit card debt when you move out of the country ?

Debt collectors are still entitled to collect any dept that you have by seizing all your properties and assets that you leave behind in the country and also they can file a lawsuit against you to pursue you to a another country

However, it is unlikely that they will do it because of two main reasons that is first of all the cost of engaging a lawsuit can exceed the debt amount and secondly most countries don’t co-operate with other countries in cases like these however the upside of it is that your your credit history will not follow you in another country and you will have a completely new credit history.

Can I go to jail for not paying the credit card debt ?

no you can’t go to jail for non paying the credit card debt but there are some other legal repercussions of which you should be aware of and which you can face.

What happens to the unpaid credit card debt after 7 years ?

7 years is a long time and after 7 years most negative items will simply fall off your credit report but you still owe the debt to the credit card issuer and they can legally try to collect the debt from you .


Here is an infographic you can have a look at which explains what happens if you don t pay your credit card. It breaks down the consequences by month basis and will help you understand all the consequences.

Final Words

So we hope we were able to explain to you what happens if you don t pay the credit card bill on time and the consequence in great detail.

If you have any doubts please comment down below and rate this article.

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