Credit card debt can become overwhelming, especially when you’re juggling multiple payments, interest rates, and unexpected life events. If you’re a Tennessee resident considering whether to stop paying your credit cards, it’s important to understand the short-term and long-term consequences, as well as your legal options. Whether you’re currently struggling with debt or simply seeking to educate yourself about the risks associated with credit card usage, understanding your options and the legal ramifications can empower you to make informed decisions about your financial future.
In this blog, we’ll walk you through what can happen if you stop making payments, what creditors are allowed to do, and how a Tennessee bankruptcy attorney can help you explore options for debt relief.
1. Immediate Consequences: Late Fees and Interest Charges
As soon as you miss a credit card payment, your account becomes past due. Typically:
- After 30 days, the issuer reports your missed payment to the credit bureaus.
- You’ll likely be hit with late fees, which can range from $25 to $40 per missed payment.
- Interest continues to accrue, increasing the balance and making it harder to catch up.
Multiple missed payments can result in higher interest rates (penalty APRs), making your financial situation even worse.
2. Damage to Your Credit Score
Credit card delinquencies can significantly impact your credit score, which lenders use to evaluate your creditworthiness.
- A single 30-day missed payment can drop your score by 50–100 points.
- The longer your account stays delinquent, the worse the damage.
- A charge-off or collection account stays on your credit report for up to 7 years.
Poor credit can affect your ability to get approved for loans, rent housing, or even secure employment in some cases.
3. Debt Collection Activity
Once your account is seriously delinquent (typically 90–180 days past due), the credit card company may:
- Send your debt to a collection agency
- Sell the debt to a third-party debt buyer
- Begin aggressive collection attempts such as phone calls, letters, and emails
Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are required to follow certain rules. They can’t harass or threaten you, and you have the right to request debt validation.
4. Legal Action: Lawsuits and Judgments
If you continue to avoid payment, your creditor can file a lawsuit against you in Tennessee civil court. If they win, they may be granted a judgment, allowing them to:
- Garnish your wages (up to 25% of disposable earnings in Tennessee)
- Place a lien on your property
- Freeze your bank account in some cases
Judgments in Tennessee are valid for 10 years and can be renewed. This means creditors may pursue collection efforts for years if no resolution is made.
5. Statute of Limitations on Credit Card Debt in Tennessee
Tennessee has a statute of limitations of 6 years for written contracts, including credit card debt. This means:
- Creditors have up to six years from the date of your last payment to sue you.
- If the statute expires and they sue, you can raise it as a defense in court.
However, making a partial payment or acknowledging the debt can restart the clock, so speak with an attorney before communicating with debt collectors.
6. When Bankruptcy May Be the Best Option
If you’re unable to pay off your debts and are facing legal action, bankruptcy may offer relief. In Tennessee, individuals typically file under:
- Chapter 7 Bankruptcy: Eliminates most unsecured debt, including credit cards, in about 3-6 months. You must pass a means test based on income.
- Chapter 13 Bankruptcy: Lets you reorganize your debt and make payments over 3–5 years while keeping your assets.
Bankruptcy immediately halts creditor actions through an automatic stay, stopping wage garnishments, lawsuits, and collection calls.
7. Should You Stop Paying to Force a Settlement?
Some people stop paying credit cards intentionally, hoping to settle for less. While it’s possible to negotiate a lump-sum settlement with your creditors:
- You must typically be severely delinquent before they’ll negotiate.
- Forgiven debt over $600 may be taxable income.
- There’s no guarantee they’ll agree, and you may face lawsuits in the meantime.
It’s best to explore all options — including debt consolidation, credit counseling, or bankruptcy — before pursuing this risky strategy.
8. How a Tennessee Bankruptcy Attorney Can Help
A qualified bankruptcy lawyer can help you:
- Assess your financial situation
- Explain the pros and cons of bankruptcy vs. debt settlement
- Determine your eligibility for Chapter 7 or Chapter 13 bankruptcy
- Protect you from creditor harassment and lawsuits
- Help you create a long-term plan for rebuilding credit
Legal representation ensures your rights are protected and can give you peace of mind during a stressful time.
9. Alternatives to Bankruptcy
If you’re not ready to file bankruptcy, consider:
- Debt management plans (DMPs): Offered through non-profit credit counseling agencies
- Debt consolidation loans: Combine multiple debts into one lower monthly payment
- Negotiating directly with creditors: You can request hardship programs or interest rate reductions
Keep in mind that these options may affect your credit or require steady income to be effective.
Final Thoughts: Know Your Rights and Act Early
Ignoring credit card debt won’t make it go away. The longer you wait, the more damage it can do to your finances, credit, and peace of mind. Whether you’re trying to catch up on payments, avoid a lawsuit, or explore bankruptcy, you don’t have to face it alone.
Get the Help You Need — Contact a Tennessee Bankruptcy Attorney Today
If you’re drowning in credit card debt and unsure what to do next, the experienced team at Rothschild & Ausbrooks, PLLC can help you explore your options. We offer compassionate legal guidance tailored to your financial needs. Schedule a free consultation today and take the first step toward a fresh financial start. Contact our Greater Nashville/Middle Tennessee consumer bankruptcy lawyer for a free consultation.
