How long will a creditor try to collect on credit card debt before giving up?
You may think creditors will eventually stop trying to collect on unpaid debt, but the reality is more complicated.
There is no specific time limit on how long a creditor will try to collect on credit card debt. Collection efforts can continue for years, depending on the circumstances. Here's the process typically followed:
Most credit card issuers begin collection attempts shortly after a missed payment. During the first few months, they send reminders, charge late fees, and contact the borrower via phone, mail, or email to bring the account current. After about 180 days of nonpayment, the creditor may charge off the account, acknowledging the debt as unlikely to be repaid under normal circumstances, but the debt remains unpaid and collection efforts continue.
Once the account is charged off, the creditor may sell it to a third-party debt collector or collection agency. These new entities may reach out to the borrower over an extended period to collect the debt. In some cases, the same debt might be sold and collected by multiple agencies. As long as collection activities follow federal and state laws, they can continue until the debt is resolved, becomes uncollectible, or the collector decides it's no longer financially worthwhile.
Even after the statute of limitations for a lawsuit expires, creditors can still attempt to collect unpaid debts. They may still request voluntary payments on time-barred debts, though they cannot misrepresent the status of the debt or threaten legal action they cannot pursue.
In some situations, creditors may stop pursuing smaller balances before the deadline due to the high costs of continued collection efforts. However, larger debts might be pursued for years, especially if the potential recovery outweighs the cost. If you're struggling with unsecured debt, exploring debt relief options as soon as possible might be more beneficial than waiting.
Debt settlement, which involves resolving debts for less than the full balance owed, can be an option, although it may negatively impact your credit and increase your tax liability. Alternatively, credit counseling agencies may recommend a debt management plan, consolidating eligible credit card payments into one monthly payment while reducing interest rates and fees.
For those with strong enough credit, a debt consolidation loan can simplify repayment and lower borrowing costs.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
