"Just stop paying your credit cards and ignore the debt."

You may have heard this tempting advice from some personal finance guru or debt-dodging life coach.

On the surface, it sounds brilliant—no more monthly credit card bills! But this short-sighted strategy can seriously backfire and haunt your finances for years.

Read on to learn:

  • What happens when you halt credit card payments
  • The financial and credit repercussions
  • Whether it ever makes sense to stop paying
  • Smarter alternatives for handling unmanageable debt

What happens when you stop paying credit cards

Initially, yes, your monthly bills disappear when you stop making payments. But this credit card debt doesn't just vanish. Here's what goes down:

  • Your accounts become delinquent, then charge off around the 6-month mark
  • Interest, late fees, and penalties cause balances to balloon
  • Debt collectors start pursuing you aggressively for payments
  • You may face lawsuits if collectors obtain court judgments against you
  • Your wages could be garnished to repay debts
  • Future car loans, mortgages, or credit cards become difficult to qualify for
  • Co-signers on accounts remain liable too

Clearly, the financial and credit fallout spans far beyond your unpaid credit cards. Those consequences can stalk you for many years.

Can collections actually garnish your wages and assets?

If an original creditor or debt collector sues you over unpaid credit card debt and wins a court judgment, they can pursue wage and asset garnishment.

This means they can legally force your employer to withhold a portion of your paycheck to cover the debts. Or they can seize funds from your bank account or put liens on your property.

Debt collectors use the court system to obtain this leverage to grab your money and assets. Failing to respond to a lawsuit allows them to win a default judgment and proceed with garnishments.

What’s the impact on your credit score?

Simply walking away from credit cards trashes your credit in several ways:

Late Payments - After 30 days past due, delinquencies show on your credit reports and hurt scores.

Charge-Offs - Unpaid debt gets charged off around 180 days late, devastating scores.

Closed Accounts - Defaulted cards eventually get closed, reducing your total credit limits.

Lawsuits/Judgments - Court cases brought by collectors appear on credit reports.

Garnishments - Forced paycheck or bank account seizures also show up.

This negative information remains on your credit reports for up to 7 years. And it can keep scores depressed for that long unless you actively rebuild credit.

Do lenders still come after you for old charged-off debt?

Even after a charge-off, creditors or debt collectors can still pursue repayment of the full balance owed plus interest and fees.

The statute of limitations sets time limits on how long they can legally sue you to collect in each state. But the debt itself has no expiration date. Collectors often sell old charged-off accounts to other agencies that may continue collection efforts.

And if you make a single payment toward the old debt, that can restart the statute of limitations period all over again. So only make payments on charged-off credit cards if settling debts in full.

Are there any scenarios where it makes sense to stop paying?

Generally, stopping credit card payments does much more long-term financial harm than good. Charge-offs, credit damage, constant collections—those outweigh any short-term relief.

But there are a few cases where it could be reasonable:

  • You've lost your job and literally don't have income to pay basic living expenses or minimums.
  • You face severe medical issues that prevent working and earning income.
  • Your only option to cover minimum payments is taking out costly payday loans.
  • Creditors refuse to work with you on reduced payment plans despite proven hardship.

If you face dire scenarios like these, consult reputable credit counseling agencies about assistance programs, debt management plans, and financial advice rather than simply stopping.

They can help assess your situation to determine if suspending payments is unavoidable. But it should be an absolute last resort.

Are there alternatives to dodging credit card debt?

Instead of stopping payments, consider these options that won't devastate your finances and credit for ages:

  • Debt Management Plan: Nonprofit credit counseling agencies can negotiate lower interest rates and payments.
  • Balance Transfer Card: Moving debt to a 0% APR card stops interest accumulation.
  • Debt Consolidation Loan - Combines multiple debts into one lower monthly payment.
  • Debt Settlement - Settling balances for less than you owe avoids charge-offs.
  • Bankruptcy - Chapter 7 or 13 filing discharges credit card debts entirely in exchange for credit damage.
  • Budgeting Help - Credit counselors can also help manage expenses and free up cash for payments.

The takeaway? While momentarily stopping credit card payments seems like easy relief, the financial and credit damage tends to be severe and long-lasting. Explore every alternative first.

The bottom line

Tempted as you may be to halt credit card payments, think through the consequences thoroughly first.

The temporary relief almost always leads to lasting credit destruction, collector harassment, potential wage/asset seizures, and financial instability.

If you face truly dire circumstances, work with reputable credit counseling agencies and financial experts to assess options. Avoid viewing skipped payments as an easy out.

Instead, find solutions that won't sabotage your financial life for ages.