Your card gets closed and your debt grows, but the damage spreads beyond that

If you stop paying your credit card, the card issuer will close your account within 60 to 180 days, depending on how many payments you miss. But closing the account is not the end—it is the beginning of a chain of consequences that affect your credit report, your ability to borrow money, and potentially your paycheck.

The issuer reports missed payments to the three credit bureaus (Equifax, Experian, and TransUnion) starting 30 days after your due date. Those reports stay on your credit report for seven years. Meanwhile, the unpaid balance keeps growing because of interest charges and late fees. After six months of no payment, the issuer typically sells your debt to a collection agency, which then contacts you to recover the money—sometimes aggressively, sometimes through a lawsuit.

Key Takeaways

  • Your account closes and your credit score drops significantly after 30 days of missed payments, making it harder to borrow money or rent housing.
  • Interest and late fees compound your debt, so a $2,000 balance can become $3,000 or more before a collection agency takes over.
  • After six months without payment, the issuer sells your debt to a collection agency that can sue you in court and win a judgment against you.
  • A judgment allows the collection agency to garnish your wages, freeze your bank account, or place a lien on your property, depending on your state's laws.
  • The entire sequence—from first missed payment to judgment—typically takes one to three years, but the damage to your credit report lasts seven years.

How the first 30 days work: when your account closes

Your first missed payment is reported to the credit bureaus 30 days after your due date. At that point, your credit score drops—usually by 100 points or more, depending on your score before the miss. The issuer also charges a late fee (typically $25 to $40) and begins charging interest on the unpaid balance at your card's regular rate.

Between day 30 and day 60, the issuer sends you notices by mail and may call you. These are collection attempts by the card company itself, not yet by an outside agency. If you make a payment during this window, the late status stops spreading, but the damage to your credit report remains for seven years.

By day 60, most issuers close your account. You cannot use the card anymore, and the closed status appears on your credit report. Your credit score continues to drop because the account now shows as "closed by creditor" rather than "closed by consumer," which signals financial trouble to lenders.

Months two through six: debt grows while the issuer tries to collect

Between 60 and 180 days of non-payment, the issuer's internal collection department intensifies contact. You may receive calls, letters, and emails. The unpaid balance grows because interest continues to accrue—often at a high rate, sometimes 20% or more annually. Late fees may be charged monthly. A $2,000 balance can become $2,500 or more during this period.

Your credit report now shows the account as severely delinquent. This status makes it nearly impossible to open new credit cards, get a personal loan, or refinance existing debt. Some employers and landlords also check credit reports, so a delinquent account can affect your housing and job prospects.

The issuer is required by law to stop collection calls 30 days after sending you a written notice of your right to dispute the debt (this is part of the Fair Debt Collection Practices Act). However, the issuer can still sue you or sell your debt to a collection agency without stopping the calls.

Month six and beyond: the debt is sold to a collection agency

After approximately 180 days (six months) of non-payment, most credit card issuers sell your debt to a third-party collection agency for a fraction of what you owe—often 5 to 10 cents on the dollar. The collection agency then owns the right to collect from you, and the issuer closes the case.

The collection agency contacts you by phone, mail, or email to demand payment. Unlike the issuer's collection department, a third-party agency is bound by stricter rules under the Fair Debt Collection Practices Act. They cannot call before 8 a.m. or after 9 p.m., cannot contact you at work if your employer forbids it, and must stop calling if you send a written request to cease contact. However, they can still sue you.

Your credit report now shows the account as "charged off" (meaning the issuer gave up on collecting) and also shows the collection agency's account. This double listing damages your credit score further. The collection account remains on your report for seven years from the date of the original missed payment, even if you pay it later.

When the collection agency sues: judgments and wage garnishment

If you do not respond to the collection agency's demands, it may file a lawsuit against you in small claims court (for smaller balances) or civil court (for larger ones). The lawsuit is filed in the county where you live or where the contract was signed. You receive a summons and complaint by mail.

If you ignore the lawsuit or do not show up to court, the collection agency wins a default judgment against you. A judgment is a court order that says you owe the debt. It does not immediately take money from you, but it gives the collection agency legal tools to do so.

With a judgment in hand, the collection agency can garnish your wages—meaning your employer is ordered to send a portion of your paycheck directly to the agency. The amount varies by state but is typically 10% to 25% of your disposable income. The agency can also freeze your bank account and withdraw money to satisfy the judgment, or place a lien on your home or car, which means you cannot sell the property without paying the debt first.

How long this process takes and when it ends

The timeline from first missed payment to judgment typically spans one to three years, depending on how quickly the collection agency sues and how busy the court is. However, the damage to your credit report begins immediately and lasts seven years from the date of the original missed payment—not from the date of the judgment.

A judgment itself can last longer. In most states, a judgment is valid for 10 to 20 years and can be renewed. This means the collection agency can pursue wage garnishment or bank account freezes for a decade or more, even if your credit report eventually stops showing the debt.

The debt itself does not disappear after seven years. The credit reporting stops, but the collection agency can still sue you if the statute of limitations has not expired. The statute of limitations varies by state (typically three to six years) and is measured from the date of the original missed payment or the date of the last payment you made, whichever is later.

What you can do if you have missed payments

If you have missed one or two payments, contact your card issuer immediately. Many issuers offer hardship programs that pause payments, reduce interest rates, or waive fees for people facing temporary financial difficulty. These programs stop the collection process and prevent the account from being sold to a collection agency.

If your account is already with a collection agency, you can negotiate a settlement. Collection agencies often accept less than the full balance—sometimes 30% to 50% of what you owe—because they bought the debt cheaply and any payment is profit. Get any settlement offer in writing before you pay.

If you have been sued, you can respond to the lawsuit in court. You may be able to negotiate a payment plan with the collection agency as part of the court process, or you may dispute the debt if the agency cannot prove you owe it. Some people also file for bankruptcy, which stops collection lawsuits and may eliminate the debt entirely, though bankruptcy has its own long-term credit consequences.

Frequently Asked Questions

Can a collection agency garnish my wages without a court judgment?

No. A collection agency must sue you and win a judgment before it can garnish your wages. However, some creditors—like the IRS or student loan servicers—can garnish wages without a judgment. Credit card companies cannot.

If I pay the collection agency, does the debt disappear from my credit report?

Paying the collection agency stops the agency from suing or garnishing your wages, but it does not remove the account from your credit report. The account remains for seven years from the original missed payment date. However, paying does change the status from "unpaid" to "paid," which looks better to future lenders.

What is the difference between a charge-off and a collection account?

A charge-off means the issuer gave up on collecting and reported the debt as a loss. A collection account means a third party now owns the debt and is trying to collect. Both appear on your credit report, and both damage your score, but a collection account signals that the debt is actively being pursued.

How long can a collection agency keep trying to collect?

A collection agency can attempt to collect for as long as the statute of limitations allows, which varies by state (typically three to six years from the original missed payment). After that period expires, the debt is time-barred and the agency cannot sue you, though it can still contact you and the debt remains on your credit report for seven years.

If I move to a different state, can the collection agency still sue me?

Yes. The collection agency can sue you in the state where you currently live, or sometimes in the state where the original contract was signed. Moving does not stop collection efforts, though it may change which court has jurisdiction and what wage garnishment rules apply.