Laws on Nonpayment of Credit Cards
- Your credit card company has the right under the Fair Credit Reporting Act to report your nonpayment status to the credit bureaus Equifax, Experian and TransUnion. This usually happens when your expected payment is at least 30 days overdue. Once you start getting late or unpaid payments reflected on your credit report, you will have a much harder time getting new credit for the next seven years.
- A credit card company can sue you for unpaid accounts and garnish part of your wages to recoup their losses, according to Bankrate.com. While you won't get fired from your job for one wage garnishment, once you start getting two or more wage garnishments your company can legally opt to fire you. But if you receive Social Security benefits, those are exempt from such garnishments.
- If all else fails and you economically qualify, you can file for bankruptcy under federal laws. Don't make this decision lightly, as you risk losing assets such as your house when you file a case. Also, while you won't have to repay your credit card debts your credit rating will be damaged for 10 years from the date of your case filing. If you used your credit cards right before filing Chapter 7 or lied to get credit, you might not be able to include such debts in your case. Also, you risk being prosecuted for bankruptcy fraud.
- If you have steady income and earned too much money to qualify for Chapter 7, you can partially repay your credit card bills and most other debts under Chapter 13. As of 2011, all of your unsecured debts including credit cards and personal loans must not exceed $360,475, according to the U.S. Bankruptcy Court. It usually takes three to five years to partially repay debts in Chapter 13. During this time frame, you cannot legally get any new credit cards or similar accounts without a judge's permission.
