Yes, card issuers can sue you for nonpayment

A reader wonders what will happen if she just refuses to pay her bills

The Credit Guy columnist Todd Ossenfort
Todd Ossenfort has been chief operating officer for Pioneer Credit Counseling since 1998. He writes our weekly "The Credit Guy" column, answering reader questions about credit counseling and debt issues.

Ask a question.
Question for the expert

Dear Credit Guy,
I have about $10,000 in credit card debt and, with the new rate hikes, cannot afford to pay the debt off. Plus, I will be having a baby soon -- taking off work, may not continue to work. If you can't afford to pay your debt, what is the best way to go about it? Should I close the two accounts before I stop paying on them so the interest can't change, etc., and try to negotiate later? Should I advise them I won't be paying anymore and can't afford to in the future? Or should I pay something even if not near the minimum? Can credit card companies sue you if do not pay? How much will my credit score decrease if I don't pay my two credit cards? -- Elaine

Answer for the expert

Dear Elaine,
The road that you are considering traveling -- not paying your credit card accounts-- is not a pretty one, but I will oblige and give you a preview of what you might expect.

The first month you do not pay, you will be assessed a late fee of approximately $29. The late fee and interest accrued for the month will be added to your balance. The following month when you do not pay you will again be charged a late fee, will have the interest accrued added to your balance, and since at that point you are 30 days late, the card issuer will likely report your account as 30 days late to the credit bureaus.

Once you reach 60 days late, the card issuer will likely raise your interest rate to the 29 percent or 30 percent range. You may be saying about now, "Wait, what about the Credit CARD Act? I thought card issuers couldn't raise rates anymore." Although the Credit CARD Act that goes into effect February 22 provides many consumer protections, it does allow the card issuer to raise your interest rate once the account is more than 60 days late.

To get some perspective on how your account will look at 60 days late, you will have added $90 in late fees and approximately $500 in interest charges -- giving you a new balance of $10,590. The next month when you are 90 days late, you will be charged the increased interest rate of 29 percent and will add about $255 in interest charges as well as the $29 monthly late fee, giving you a new balance of $10,874. At 120 days late, the card issuer will likely charge off the debt and your accounts will be in collections for a total of $11,165. In case you aren't doing the math, that is an increase in your balances of $1,165 in four months.

Many people believe that once the debt is charged off by the original creditor that the fees and interest are no longer added to the account. This is false. Your accounts will continue to accrue interest and fees while in collections.

Now for your questions in the order asked. Closing your accounts will not prevent an increase in interest rate if you do not pay as agreed on the account. If you cannot make the minimum payment, your balances will continue to increase, albeit at a slightly less rapid pace and you will still be charged late fees. Absolutely, credit card issuers can proceed with any and all collections activities that are permitted in the Fair Debt Collection Practices Act, including suing you in court. Charged-off accounts are extremely devastating to your credit report and will not come off your report until seven years from the first delinquency date reported.

Adding a new baby to a household is stressful enough, you don't need the added stress of a collections process. My recommendation is that you make the changes necessary in your spending or your income to pay your card balances. You can seek assistance with lowering your interest rates by visiting with a qualified nonprofit credit counselor at the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. 

Take care of your credit!

See related: How wage garnishment works -- and how to avoid it, 8 tips to keep rates and fees low

Meet's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday,'s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 01-17-2018