How To Stop Paying Credit Cards Legally

Bankruptcy is your best option for getting rid of debt without paying. Before committing to filing bankruptcy, understand your options and the consequences that come with having a bankruptcy on your credit report.

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Anyone who’s been in deep credit card debt knows that paying it off can be a long and stressful process, so it’s natural to wish for a quick fix. But paying off your debt is even harder in today’s environment, where credit card balances and interest rates are both at all-time highs.

The good news is there are legal ways to reduce and even eliminate your credit card debt – including debt management plans, bankruptcy, and in some cases, debt settlement. Whichever approach you choose, know that there are also drawbacks, ranging from legal fees to credit score damage.

Legal Ways to Cease Credit Card Payments

Many people want to know how to get out of credit card debt without paying it all off and without getting into legal trouble.

First off, you should know that it’s not illegal to stop paying your credit cards. You can’t be sent to jail and debt collectors are not allowed to threaten you in order to get money. They can, however, choose to sue you in certain circumstances. Here are some ways you can get your debt reduced or dismissed without bringing on any legal trouble.

Here are a few to consider:

Debt Settlement

Debt settlement is a process that involves negotiating with creditors to pay less than the full amount you owe. This solution is worth considering when your debt is already in collections and you need to resolve the collection accounts for a specific reason, like to avoid an impending lawsuit or to get approved for a mortgage.

There are several safe ways to go about settling debt, but hiring a for-profit debt settlement company might not be one of them. When you hire these companies, you put yourself at greater risk of being sued by debt collectors and, on top of that, you’ll pay major fees for their services, which do severe damage to your credit scores.

If you do want to settle debt safely, consider negotiating directly with your creditors or debt collectors yourself, or working with a credit counseling agency that offers nonprofit debt settlement services.

Debt Management Plan (DMP)

A debt management plan (DMP) is a special payment plan you can enroll in through a nonprofit credit counseling agency. Going on a DMP does not forgive your credit card debt, but it can help you in a number of other ways:

  • Consolidates your credit cards into one monthly payment
  • May reduce your monthly credit card payment
  • May reduce your interest rates to around 8% and forgive late fees

Like other options, DMPs have their drawbacks. For example, you may have to close all of your credit cards, which means your credit scores will initially drop. But in the long term, you can see tremendous benefits to your credit scores as you pay off debt and implement the money management strategies you receive from your credit counselor.


If you can’t afford to pay back all of your credit card debt within the next five years, it’s time to carefully consider filing for bankruptcy. Bankruptcy is a legal process that can result in having some or all of your debt forgiven, but it’s not a quick or painless solution for credit card debt.

Bankruptcy attorney fees can cost anywhere from $1,250 to $3,000 on average and filing bankruptcy damages your credit scores more than any other debt-related activity.

If you do wish to file bankruptcy, you typically have one of two options:

  • Chapter 7 bankruptcy: With Chapter 7, the court appoints a trustee to sell your non-essential assets and distribute the proceeds to your creditors. Your remaining debt is then discharged or canceled.
  • Chapter 13 bankruptcy: If you’re earning income, you can go on an affordable, 3-5 year repayment plan under Chapter 13, and then have your remaining debt discharged after the payment plan ends.

Comparison of Options for Debt Relief

Direct Debt SettlementNonprofit Debt settlementFor-profit debt settlementDebt management planCh 7 BankruptcyCh 13 Bankruptcy
Up-front feesXX$50+$39-$70$1,800$3,800
Monthly feeXUp to $75$15-$35$7-$60XX
Settlement feeXX15%-35% of your total debt, plus $30 per debtXXX
Payment plan (years)X33-43-5X3-5
Risk of lawsuitXXXXX
Credit score damageSignificantSignificantSignificantModerateSevereSevere
Forgiven debt can be taxed

Consequences of Stopping Payments Without a Legal Process

If you stop paying your credit cards without using one of the strategies above, you could face serious consequences. The longer you go without paying, and the more you owe, the worse the outcome will be. Here’s what usually happens when you fall behind on credit card payments:

  • Day 1: Begin accruing late fees and interest charges and lose the ability to earn and access your credit card rewards.
  • 30-179 days: For every 30 days late, a missed payment will appear on your credit reports for seven years. Your late fee and monthly payment amount will increase and a high, penalty interest rate may be applied to your account.
  • 180 days: Your account will likely be closed and sold to a debt collector, causing further damage to your credit scores. You forfeit any credit card rewards you’ve earned.
  • While in collections: The debt collector may add interest charges to your balance and choose to sue you for the funds until the statute of limitations.

Alternatives to Not Paying Your Credit Cards

If you don’t want to take on the fees and credit damage involved with bankruptcy and debt settlement, look for other ways to make your debt manageable. Any or all of the following strategies could help:

  • Contact your creditor: Advise your creditor that you’re having a financial hardship and ask if they can pause or reduce your payments. They may also allow you to move your payment due date to a later date in the month.
  • Consolidate: Use a low-interest loan or a 0% introductory APR credit card to pay off your debt, but only if it helps you get into a more affordable payment arrangement, with all fees considered.
  • Debt avalanche: Use the debt avalanche strategy to reduce your interest charges and pay down debt faster. With this strategy, you use all of your spare cash to pay off the credit card with the highest APR first. Once it’s paid off, you move your extra cash to the card with the next-highest APR.
  • Credit counseling: Talk to a certified credit counselor to get professional insights on all of your debt management options. A counselor can also review your budget and help you find ways to cut costs and pay off debt more aggressively.
  • Military aid: For servicemembers and veterans, see if you’re eligible for grants, loans or other help from the VA or your military aid society.

Preparing Financially and Mentally

According to a Gallup poll, 25% of Americans are worried about covering the minimum payments on their credit cards. While it’s easy to pinpoint how much credit card debt you have, it can be impossible to measure the emotional toll worrying about debt takes on you.

When you’re in a stressed state-of-mind, it’s difficult to make thoughtful decisions about money. You might find yourself spending impulsively, slipping into denial about your debt, or looking for a quick fix, regardless of the consequences. Instead of giving in to the stress, keep these tips in mind:

  • Schedule time to review your options and carefully weigh the pros and cons of each one, without distractions.
  • Remember the quick solution isn’t usually the best. There may be big fees and other consequences down the line.
  • Get help from a professional credit counselor if you feel overwhelmed or confused by what’s available, or if you need help communicating with your creditors.

Navigating Your Path Out of Credit Card Debt

There are a handful of different ways you can eliminate credit card debt without getting into legal trouble. But some of them involve major fees and credit damage. Before you make a decision, compare your options, making sure to consider all of the up-front and ongoing costs involved. And remember, if you do decide to go use an option like a DMP or filing bankruptcy, your debt will eventually be eliminated but the damage to your credit scores won’t last forever.

About The Author

Max Fay

Max Fay has been writing about personal finance for for the past five years. His expertise is in student loans, credit cards and mortgages. Max inherited a genetic predisposition to being tight with his money and free with financial advice. He was published in every major newspaper in Florida while working his way through Florida State University.


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