Your card gets reported to credit bureaus, your interest charges grow, and your issuer will contact you repeatedly
When you miss a credit card payment, the issuer doesn't when ready close your account or sue you. Instead, a sequence of events unfolds over weeks and months. Your payment is reported as late to the three major credit bureaus — Equifax, Experian, and TransUnion — which damages your credit score. At the same time, interest continues to accrue on your balance, and the issuer's collection department begins calling and sending letters. If you don't pay within 180 days (six months), the account is typically charged off, meaning the issuer writes it off as a loss on their books and may sell the debt to a third-party collector.
The timeline and severity depend on how long you go without paying and whether you contact the issuer. A single missed payment hurts less than six months of non-payment. But even one late payment stays on your credit report for seven years, affecting your ability to borrow at good rates during that entire period.
Key Takeaways
- A missed payment is reported to credit bureaus within 30 days and damages your credit score when ready, even if you pay a few days late.
- Interest and late fees continue to pile up on your unpaid balance, sometimes doubling what you originally owed within a year.
- After 180 days without payment, the issuer typically charges off the account and may sell the debt to a collection agency that will pursue you for years.
- Creditors can sue you for the debt and, if they win, garnish your wages or freeze your bank account, depending on your state's laws.
- Stopping payment does not erase the debt — it only delays consequences and makes them worse.
How your credit score drops and when it happens
Your credit score begins to fall as soon as a payment is 30 days late. The issuer reports it to the credit bureaus, and the damage is when ready and visible to anyone who pulls your credit report — lenders, landlords, employers, and insurance companies. A 30-day late payment typically costs 100 to 150 points on a FICO score, depending on your starting score and credit history. A 60-day late payment costs more, and a 90-day late payment costs even more.
The impact is heaviest in the first few months after the late payment is reported. Over time, the damage lessens — a late payment from two years ago hurts less than one from two months ago. But the record itself stays on your credit report for seven years from the date you first missed the payment. This means you will see higher interest rates on any new credit you take out during that entire period, and some lenders will deny you altogether.
Interest, fees, and how your debt grows
While you are not paying, two things happen to your balance. First, interest continues to accrue at your card's annual percentage rate (APR). If your APR is 20% and you owe $5,000, you are accruing roughly $83 per month in interest alone. Second, the issuer adds late fees — typically $25 to $40 per missed payment, sometimes more if you miss multiple payments in a row.
Some issuers also raise your APR if you miss a payment. This is called a penalty APR, and it can push your rate to 29% or higher. The penalty APR usually applies only to new purchases, not your existing balance, but it makes the debt grow faster. After six months of non-payment, your original $5,000 balance could easily be $6,500 or more, depending on your APR and how many fees were added.
The issuer may also freeze your account, preventing you from making new purchases. This stops the bleeding in one sense — you cannot add more debt — but it does not stop the interest and fees from accumulating on what you already owe.
Collection calls and letters from the issuer
Within days of missing a payment, the issuer's collection department begins contacting you by phone and mail. These calls and letters will increase in frequency as your account falls further behind. The issuer is trying to get you to pay, and they have legal rights to contact you — but those rights have limits under the Fair Debt Collection Practices Act (FDCPA).
The issuer's own collection department can call you before 8 a.m. or after 9 p.m. only if you agree. They cannot call you at work if your employer forbids it, and they cannot harass you, use profanity, or make false threats. If you send a written request asking them to stop calling, they must stop — though they may continue sending letters. You can also request that they contact you only by mail if phone calls are a problem.
If you want to dispute the debt or negotiate a settlement, respond to these letters or calls. Ignoring them does not make the debt go away, and it makes it easier for the issuer to pursue legal action later without hearing your side.
Charge-off and sale to a collection agency
After 180 days (six months) of non-payment, most issuers charge off the account. This means they remove it from their active accounts and write it off as a loss on their financial statements. A charge-off is reported to the credit bureaus and appears on your credit report as a serious delinquency. It is not the same as the debt being forgiven — you still owe it.
Once an account is charged off, the issuer often sells the debt to a third-party collection agency for a fraction of what you owe. The collection agency then owns the debt and has the right to pursue you for payment. Collection agencies are also bound by the FDCPA, but they are often more aggressive than the original issuer. They will call repeatedly, send letters, and may file a lawsuit if the debt is large enough.
A charge-off stays on your credit report for seven years from the original date you missed the payment, not from the date of the charge-off itself. This means the damage does not reset when the debt is sold — it continues to harm your credit for the full seven-year period.
Lawsuits, judgments, and wage garnishment
If your debt is large enough — usually $1,000 or more — a collection agency or the original issuer may file a lawsuit against you. The lawsuit is filed in civil court, and you will receive a summons. If you ignore it or lose the case, the creditor obtains a judgment against you, which is a court order saying you owe the debt.
With a judgment in hand, the creditor can pursue wage garnishment, which means money is automatically deducted from your paycheck and sent to the creditor. The amount varies by state and by how much you owe, but it can be 10% to 25% of your disposable income. Some states protect more of your wages than others — a few states limit garnishment to 10%, while others allow up to 25%.
A creditor can also freeze your bank account or place a lien on your property, depending on your state's laws. A lien means the creditor has a claim on your home or car and can force a sale to collect the debt. Not all states allow this, and some have exemptions that protect certain assets, but it is a real possibility if you owe a large amount and the creditor obtains a judgment.
What you can do if you have stopped paying
If you have missed payments and are behind, contact your issuer when ready. Many issuers offer hardship programs that can lower your interest rate, waive fees, or create a payment plan you can actually afford. These programs are not advertised widely, but they exist, and issuers would rather work with you than send your debt to collections.
If you cannot afford to pay the full balance, ask about a settlement. Some issuers will accept a lump sum that is less than what you owe — often 40% to 60% of the balance — to close the account. This still damages your credit, but it stops the interest from accruing and prevents a lawsuit. Get any settlement offer in writing before you pay.
If the debt has already been sold to a collection agency, you can negotiate directly with the agency. They bought the debt for pennies on the dollar, so they are often willing to settle for less than the full amount. Again, get the settlement in writing and ask for a letter stating the debt is paid in full once you settle.
If you are being sued or have already lost a case, you may be able to file for bankruptcy to stop wage garnishment and other collection actions. Bankruptcy is a serious step with long-term consequences, but it can be the right choice if you owe more than you can ever repay. Consult a bankruptcy attorney — many offer free consultations.
How long the damage lasts
A late payment stays on your credit report for seven years. A charge-off also stays for seven years from the original missed payment date. A judgment can stay on your report for seven years in some states and longer in others — check your state's laws. A collection account stays for seven years from the date it was first reported to the credit bureaus.
After seven years, the late payment, charge-off, and collection account all fall off your credit report automatically. This does not erase the debt legally — you can still be sued in some cases — but it removes the negative mark from your credit history. Your credit score will improve once these items disappear, though it may take time to rebuild trust with lenders.
Frequently Asked Questions
Can a credit card company sue me for not paying?
Yes. If your debt is large enough — usually $1,000 or more — the issuer or a collection agency can file a lawsuit in civil court. If they win, they obtain a judgment that allows them to garnish your wages, freeze your bank account, or place a lien on your property, depending on your state's laws.
What is the difference between a charge-off and paying off the debt?
A charge-off means the issuer has written off the debt as a loss and reported it to credit bureaus. You still owe the debt legally, and it may be sold to a collection agency. Paying off the debt means you have satisfied the obligation and owe nothing more. A paid charge-off still damages your credit, but it is better than an unpaid one.
Will the debt go away after seven years?
The negative mark will fall off your credit report after seven years, but the debt itself does not disappear legally. In most states, a creditor cannot sue you after the statute of limitations expires — typically three to six years depending on your state — but some states allow longer. Check your state's laws or consult an attorney if you are unsure.
Can I negotiate with a collection agency to pay less than I owe?
Yes. Collection agencies often settle for less than the full balance because they bought the debt cheaply. Offers typically range from 40% to 60% of what you owe. Always get the settlement in writing before you pay, and ask for a letter confirming the debt is paid in full once the payment is made.
What happens if I ignore collection calls and letters?
Ignoring them does not stop the debt or make it go away. It makes it easier for the creditor to pursue a lawsuit without hearing your side of the story. If you are sued and ignore the court summons, the creditor can win by default and obtain a judgment against you, leading to wage garnishment or bank account freezes.