Unpaid credit cards fall into the “civil debt” category and are not punishable by jail time. However, criminal offenses related to financial affairs, like tax evasion, could land you in jail. It's important to know that ignoring judgments against you could result in serious legal consequences, including jail time.
After several months of non-payment, creditors may charge off your debt and sell it to a third-party collection agency. This can lead to more aggressive attempts to recover the money as well as damage to your credit score. In some cases, creditors or collectors may take legal steps to compel you to pay.
Specifically, the rule states that a debt collector cannot: Make more than seven calls within a seven-day period to a consumer regarding a specific debt. Call a consumer within seven days after having a telephone conversation about that debt.
If you don't show up, you will be allowing default judgments to enter against you and the creditor will obtain the FULL amount claimed, usually plus court costs and fees, and this will hang over your head for at least 10 years.
According to the Consumer Financial Protection Bureau (CFPB), credit card companies sue their customers about 12% of the time. On average, credit card companies sue to recover balances over $2,700—this isn't a set amount, but an average. Credit card companies can and do sue on debts both larger and smaller than $2,700.
When you owe money on your credit card, the people you owe must follow rules set out by law. Action can be taken against you to collect the debt but you have the chance to avoid this. Credit cards are covered by the Consumer Credit Act (CCA).
Debt collectors cannot harass or abuse you. They cannot swear, threaten to illegally harm you or your property, threaten you with illegal actions, or falsely threaten you with actions they do not intend to take. They also cannot make repeated calls over a short period to annoy or harass you.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
If you stop paying one of your credit card bills, the issuer may charge you fees, increase your interest rate and report the late payments to the credit bureaus. You may also eventually find yourself the target of debt collection agencies or a lawsuit, which could lead to your wages or bank account being garnished.
More frequently than most consumers probably realize. While precise statistics are difficult to come by, legal experts estimate that several million debt collection lawsuits get filed across the United States every single year.
If you own a home, and have fallen behind on your credit cards or other unsecured debts you may be worried about what these creditors can do to collect on the debt. In many states, including California, unsecured creditors can become secured creditors and place a lien on your home.
You Can Be Sued for Credit Card Debt
You can't be sent to jail for unpaid credit card bills, but you can be sued. When you fall behind on a credit card bill, your creditor or the collection agency may decide to take legal action to get the money back. If this happens, you'll be served with legal papers.
In some states, you can choose jail instead of repaying debt
Some states, including California and Missouri, offer a third option for those who cannot afford to pay their criminal justice debts: choosing jail. By choosing to go to jail, it may be possible to avoid wage garnishment and reduce criminal justice debt.
Your home provides security to the lender that you would pay back the debt. If you owe money for most other debts like credit cards and medical bills, you (usually) did not sign a security agreement. So, the creditors cannot seize your home to pay the debt.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the: Type of debt. State where you live.
Debt relief or debt cancellation is the partial or total forgiveness of debt, or the slowing or stopping of debt growth, owed by individuals, corporations, or nations. From antiquity through the 19th century, it refers to domestic debts, in particular agricultural debts and freeing of debt slaves.
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
Perhaps the most common debts that cannot be discharged under any circumstances are child support, back taxes, and alimony. Here are some of the most common categories of non-dischargeable debt: Debts that you left off your bankruptcy petition, unless the creditor had knowledge of your filing. Many types of taxes.
According to the American Association for Debt Resolution, the average settlement amount is 50.7% of the balance owed. So yes, if you owed a dollar, you'd get out of debt for fifty cents. But the average amount of debt enrolled is $4,500. That means you should still expect to pay a hefty sum to get out of debt.
Walking away from your debt, also known as defaulting, could seem like your best option if you're struggling to keep up with bills. However, walking away from debt won't solve all of your problems. Your lender can still try to sue you for the remaining amount or sell the loan to a collection agency.
If you can't pay your credit card bill, it's important to act right away. Contact your credit card company immediately. Many card companies are willing to work with you to change your payment if you're facing a financial emergency.
If you continue not to pay, you'll hurt your credit score and you risk losing your property or having your wages or bank account garnished.