How to Walk Away from Credit Card Debt

Edited by Hannah Locklear

Credit card debt can feel like it is swallowing you whole, but if you do not pay it, then your credit score will take a big hit. If you do not care about owning a home, obtaining a rental lease, or being able to get a new credit card, then you might not care about your credit score.

However most people want to be able to have credit in their lifetime, so walking away from credit card debt is not always simple.

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How walking away from debt usually goes

If you have decided to “walk away” from your credit card debt then you may have stopped making payments. After 30 days you should expect a letter or a call from your creditor. This will explain that you have missed a payment. At this point, it will most likely be reported to one or more of the credit bureaus.

After 60 days if you haven't paid, the creditors will most likely begin to call more. You may notice late fees, and penalty interest being added to your bill. You will notice your credit score begin to drop at this point.

After 90 days you will be declared in “default”. You will see your score continue to drop, and the account may be sold to a debt collection agency.

What happens when your debt goes to a collection agency

Once your debt has reached a collection agency the agency will report it as a collection account to the credit bureaus. You will see your credit score dramatically drop, and they will begin to pursue you aggressively. It is good to be aware that the Fair Debt Collection Practices Act limits collection agency practices, but most often debt collectors will still push you to pay.

If you continue to walk away from your debt you may be served with a lawsuit. Collection agencies file millions of lawsuits every year and sometimes lose the required paperwork. This can be a good defense to a debt collection lawsuit.

If you do not respond to the lawsuit then a default judgment will be placed against you. They may be able to garnish your wages, place a lien against your property, or take money directly from your bank account.

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It is also good to note that collection agencies typically buy debt for an average of 4 cents for every dollar of your debt. Because of this, many agencies are willing to settle your debt for less than you owe.

How to walk away from credit card debt

The best way to walk away is not to walk away. Despite this, if you choose to you will need to avoid multiple reminders from your creditors before it goes to collections. Since credit card debt is one of the most common forms of debt in the United States, you might find it easy to walk away, but this is not always the case. After 90 days you most likely will not be able to use your credit card, and debt collection will get more serious.

Your credit score will dramatically decrease. You may no longer be able to get a loan, and even if you do, you will have an incredibly high-interest rate putting you deeper into debt.

Once the collection agency begins to pursue you, you will be sued. If a judgment is placed against you then your wages could be garnished. Your only true option lies in hoping that the debt collector makes mistakes.

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More options for dealing with your credit card debt

Because many people walk away from debt simply by ignoring the calls and letters, it is usually by accident. Most people want to avoid dealing with debt if they cannot pay them. Debt collectors assume you will never answer them, but you can choose to fight the lawsuit instead, and possibly have it dropped.

Debt collectors often purchase multiple debts at a time and at a lower price (as mentioned). If you happen to ask for proof that you owe the debt and they cannot provide that, the lawsuit will be dropped. The only way to force you to pay the debt, or obtain a judgment, is to prove that you are responsible for it. Should this paperwork be lost, they have no proof.

Another way to somewhat walk away from the debt is to settle it. This is by offering a lump sum of money in exchange to have the debt wiped clean (also known as satisfied). It is not the perfect option, but it is better than allowing your credit to be destroyed.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit: A Student Solution To Give Utah Debtors A Fighting Chance

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri

Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah; File a Motion to Satisfy Judgment Vermont Virginia Washington West Virginia Wisconsin Wyoming

Guides on how to beat every debt collector

Being sued by a different debt collector? We're making guides on how to beat each one.

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Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

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