Your card issuer will report you to credit bureaus, charge you fees, and eventually send your debt to a collection agency

When you miss a credit card payment, the issuer starts a sequence of events that damages your credit score, costs you money in penalties, and can lead to a lawsuit. The first missed payment triggers a late fee (usually $25 to $40) and interest charges on your balance. After 30 days, the issuer reports the missed payment to the three major credit bureaus—Equifax, Experian, and TransUnion. This report stays on your credit report for seven years and immediately lowers your credit score, often by 100 points or more depending on your score when the miss happens.

As months pass without payment, the consequences compound. After 60 days, you receive another late fee. After 90 days, the issuer may raise your interest rate to a penalty rate, which can be 29% or higher. After 120 to 180 days of non-payment, the card issuer typically closes your account and writes off the debt as a loss on their books. This does not mean you stop owing the money—it means the issuer sells the debt to a collection agency or keeps it in-house as a collection account. From that point forward, a collector can contact you by phone, email, or mail to demand payment.

Key Takeaways

  • Late fees and penalty interest rates begin immediately after a missed payment, adding hundreds of dollars to what you owe within months.
  • Credit bureaus receive a report of your missed payment after 30 days, and this negative mark stays on your credit report for seven years.
  • After 120 to 180 days without payment, the issuer typically sells your debt to a collection agency, which then pursues you for the full amount.
  • A collector can sue you in court to obtain a judgment, which allows them to garnish your wages or place a lien on your property, depending on your state's laws.
  • The statute of limitations for debt collection varies by state (usually three to six years), but collectors can still contact you after that period ends.

How late fees and interest pile up in the first months

Your first missed payment triggers a late fee within days. Most issuers charge $25 for the first late payment and $35 for subsequent ones within a six-month period. At the same time, interest continues to accrue on your balance at your regular APR. If you miss a second payment 60 days later, you pay another late fee. If you miss a third payment 90 days after the first, the issuer typically applies a penalty APR—a much higher interest rate reserved for accounts in serious default.

A penalty APR can be 29.99% or higher, and it applies to your entire balance, not just new charges. On a $5,000 balance, a penalty APR of 29.99% costs you roughly $125 per month in interest alone. Combined with late fees, your debt grows faster than you can pay it down. After six months of missed payments, you may owe $6,000 or more on a $5,000 original balance, even if you have not made any new charges.

What happens to your credit score and credit report

A missed payment is reported to credit bureaus 30 days after the due date passes. This single report can drop your credit score by 100 to 180 points, depending on your score before the miss. If your score was 750, it might fall to 600. If it was 650, it might fall to 500. The damage is immediate and severe because payment history is the largest factor in credit scoring—it accounts for 35% of your FICO score.

The missed payment stays on your credit report for seven years from the date you first missed the payment. During those seven years, lenders see the negative mark when you apply for a mortgage, car loan, apartment rental, or even a job that requires a credit check. Your ability to borrow money at reasonable rates is severely limited. After seven years, the mark falls off automatically, but the damage to your borrowing power lasts the entire period.

When the debt moves to a collection agency

After 120 to 180 days of non-payment, the card issuer typically closes your account and either sells your debt to a third-party collection agency or assigns it to an in-house collection department. At this point, you stop hearing from the card issuer and start hearing from a collector. The collector now owns the right to pursue you for the full balance, including the original debt, accrued interest, and sometimes collection costs.

A collector can contact you by phone, email, or mail. Under the Fair Debt Collection Practices Act (FDCPA), a collector cannot call before 8 a.m. or after 9 p.m. in your time zone, cannot call your workplace if your employer forbids it, and cannot harass you with repeated calls or threats. If you send a written request asking the collector to stop contacting you, they must stop—though they can still pursue legal action. You have the right to request that the collector verify the debt in writing within 30 days of their first contact.

How a collector can pursue you in court

A collector can file a lawsuit against you in civil court to obtain a judgment. If the collector wins (and they often do, especially if you do not respond to the lawsuit), the judgment gives them the legal right to collect from you through wage garnishment, bank account levies, or liens on your property. The specific tools available depend on your state's laws. Some states allow wage garnishment up to 25% of your disposable income. Others allow collectors to freeze your bank account and take money directly. Some allow liens on your home or car.

You have the right to respond to a lawsuit and present a defense in court. Common defenses include that the debt is not yours, that the amount is wrong, or that the statute of limitations has passed. If you do not respond to the lawsuit at all, the court typically enters a default judgment against you, which means the collector wins without having to prove anything. A judgment can be enforced for many years—sometimes 10 to 20 years depending on your state—so the collector's leverage extends far beyond the original debt.

The statute of limitations and when collectors must stop

Every state has a statute of limitations for debt collection, which is the deadline for a collector to file a lawsuit. This period varies by state and by the type of debt. For credit card debt, the statute of limitations is typically three to six years, though a few states allow longer periods. Once the statute of limitations expires, a collector can no longer sue you in court. However, the debt itself does not disappear, and the collector can still contact you to demand payment.

The statute of limitations clock starts from the date of your last payment or last charge on the account, not from the date you stopped paying. If you make a payment or acknowledge the debt in writing, the clock may restart in some states. If you do not respond to a collector's contact, the clock keeps running. After the statute of limitations passes, you can raise it as a defense if a collector sues you, and the court will dismiss the case. But many people do not know this defense exists and pay old debts after the statute of limitations has expired, which they did not have to do.

Options if you cannot pay the full balance

If you cannot pay your credit card bill, you have options before the debt reaches a collector. You can contact your card issuer and ask about a hardship program, which may lower your interest rate, waive fees, or allow you to pause payments for a set period. You can also negotiate a settlement with the issuer—offering to pay a lump sum that is less than the full balance in exchange for the issuer closing the account and reporting it as settled. A settlement damages your credit score, but it stops the accumulation of interest and fees and resolves the debt faster than waiting for a collector to pursue you.

If the debt has already gone to a collector, you can negotiate a settlement with the collector as well. Collectors often accept 30% to 60% of the balance as a settlement because they know that collecting the full amount is difficult and time-consuming. Any settlement should be in writing before you send payment, and you should specify that the collector will report the account as "settled" or "paid in full" to the credit bureaus. Without that written agreement, a collector may report the account as "settled for less than full balance," which still damages your credit score.

Bankruptcy as a last resort

If your credit card debt is so large that you cannot pay it even through settlement, bankruptcy is an option. Chapter 7 bankruptcy allows you to discharge unsecured debts like credit cards entirely, meaning you do not have to pay them. Chapter 13 bankruptcy creates a repayment plan where you pay back a portion of your debts over three to five years. Bankruptcy stops collection lawsuits immediately through an automatic stay, and it removes most debts from your credit report after seven to ten years.

Bankruptcy is a serious step with long-term consequences—it stays on your credit report for seven to ten years and makes it harder to borrow money, rent an apartment, or get certain jobs. However, it can be the right choice if your debt is truly unmanageable and you have no other way out. If you are considering bankruptcy, speak with a bankruptcy attorney who can review your situation and explain your options. Many offer free initial consultations.

Frequently Asked Questions

How much will my credit score drop if I miss one payment?

A single missed payment typically drops your score by 100 to 180 points, depending on your score before the miss. The higher your score before the miss, the larger the drop. A score of 750 might fall to 600, while a score of 650 might fall to 500. The damage is immediate and severe because payment history is the largest factor in credit scoring.

Can a collector contact me at work or call me repeatedly?

No. Under the Fair Debt Collection Practices Act, a collector cannot call your workplace if your employer forbids it, and cannot call before 8 a.m. or after 9 p.m. in your time zone. They also cannot harass you with repeated calls or threats. If you send a written request asking them to stop contacting you, they must stop, though they can still pursue legal action.

What happens if I ignore a lawsuit from a collector?

If you do not respond to a lawsuit, the court typically enters a default judgment against you, which means the collector wins without having to prove anything. A judgment gives the collector the right to garnish your wages, freeze your bank account, or place a lien on your property, depending on your state's laws. Always respond to a lawsuit, even if you think you owe the debt.

Do I still owe the debt after the statute of limitations expires?

Yes, the debt itself does not disappear. However, a collector can no longer sue you in court after the statute of limitations expires (usually three to six years for credit card debt). If a collector sues you after the deadline, you can raise the statute of limitations as a defense and the court will dismiss the case. The collector can still contact you to demand payment, but they cannot force you to pay through the courts.

Can I negotiate with my card issuer before the debt goes to a collector?

Yes. You can contact your card issuer and ask about a hardship program, which may lower your interest rate or allow you to pause payments. You can also offer a settlement—a lump sum that is less than the full balance in exchange for closing the account. A settlement damages your credit score but stops interest and fees from accumulating and resolves the debt faster than waiting for a collector.