I Stopped Paying My Credit Cards. Here’s What Happened
I got served with a court notice 😲
I have no problem with transparency. I feel like so many people show how perfect they are at life. But sometimes, sharing the missteps we make can be beneficial for the whole. Well, I don’t mind throwing my hat in for the greater good. In the words of Ludwig Wittgenstein, ‘If people never did anything stupid, nothing intelligent would ever get done’. Here’s the story.
For the past three years and change, I’ve been on what I’ve dubbed called a “life break.” During this break, I’ve become fully self-employed, traveled the world, and started a family. About a year into my life as a global citizen, I decided to live off cash and stop using credit.
It’s not nearly as convenient to use credit cards in Asia as I’d been accustomed to in the States. Here, cash is king.
Call it negligence, irresponsibility, or delusion, but I had convinced myself I didn’t need to worry about my credit for a while. And, in a way, I didn’t. Sooner or later, however, I had to wake up from the dream.
These are the lessons I learned:
1. Your debt is your responsibility, but you’re still entitled to dignity
When you take out a credit card or loan, you enter a binding agreement with a company stating your intentions to return any borrowed money. You also accept the consequences for failure to do so.
If you cannot or do not pay on your debt, the company is fully entitled to come to you to collect their money. And you are responsible for paying them. But you don’t lose your humanity because you have debts. You are a person who deserves to be respected, not belittled or harassed.
In fact, here’s a great article discussing what debt collectors cannot do. One of them is they are not entitled to harass you. You have rights, too, even if you’ve fallen behind.
2. Calling Collections too early, I paid too much
When I started calling my creditors, some of the accounts had been with collections for only a month, while others had a longer-established account. I noticed that the representatives I spoke with regarding the accounts that were freshly in collections were less lenient in offering me a reduced settlement. But the longer-standing accounts were ready and willing to accept the number I proposed.
One of my creditors seemed so desperate to clear the account that it settled for far lower than the original credit I’d owed. I was grateful for the discount. Do know, though, this is reported directly on my credit report, “Settled for less than full balance”.
3. Some companies are notorious for going to court
Discover was the most polite company through this entire experience. They called and emailed me several times, to which I never responded. (Don’t do this. At least check in. Discuss what’s going on with your situation. See what your options are.)
My refusal to communicate didn’t put a stop to my responsibilities. Instead, what it did was solidify a pretty strong case against me that the courts could deem as proof that I was not holding up my end of the deal. The court most definitely would have ruled in favor of Discover.
4. Sending letters through a law firm escalates legal action
I signed up with a debt repair law firm solely for the purpose of removing negative items from my credit report. Perhaps, I could simply select “This isn’t mine” when addressing the negative items, thus making them disappear.
No, I wasn’t really naive enough to believe it actually worked this way. I think some people do, though, so I want to bring attention to this thinking.
What did happen was legal correspondence was sent to my creditors, prompting them to act. It showed that I was addressing my credit without actually addressing the debt that I had with them in the first place. Doing so generated a legal inquiry.
The letters appeared as if I was attempting to slide through the system.
Discover hit back with the big boys. I imagine they said, “Ok. She wants to go legal. We’ve got our team.” After the court notice, I stopped getting the polite treatment from them. This in no way is intended to bash Discover, by the way. I recognize they have their policies and procedures, and I respect them.
I was in the wrong, full admission. I’d borrowed money, stopped paying back on that money I’d borrowed, then sent a lawyer to clean up my mess. I called customer service to get more information and was promptly redirected to their legal line.
In rough translation: This is to notify you that (company) is suing you for past debt.
Seen, Discover. Seen and heard, loud n clear.
Fortunately, I had made a payment to settle the balance immediately after being served papers (hand-delivered by the Marshal himself, mind you). So, by the time the court session rolled around my case was dismissed.
So, learn from my mistakes, and take what you need.
Which parts here are mistakes? All of it, I suppose. I guess it depends on where in the story you identify with more.
I am not a financial advisor, and none of what is written here is legal advice. I’m merely sharing my experience if you’re wondering what happens if you stop paying your credit cards.
You might not want to take these chances if you can help it. And if you’re already in one of these stages, you can know what to expect.
Fortunately, credit is repairable. It might not be an easy feat, but it is possible.
The good news is that I’ve finally submitted payment to my last creditor. I’d totally forgotten about them (another bad idea).
Also, my credit score is already hovering in the “Average” range at about 682 as of this writing.
Definitely some work still to do. Still, not horrible considering the heaping of irresponsibility my credit sustained.
The final takeaways are:
- Your credit problems will not disappear if left unattended.
- Time is on your side, but you have to take accountability.
- It’s all fixable.
From here, I’ll let time do what it does. I’ll be in a better position by the time I return to the States, or should I want to utilize credit again. It’s helpful that I can live off cash for the moment, but I do miss the Cashback incentives.
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