What Can a Credit Card Issuer Do for an Unpaid Account?

When you apply for a credit card, you don't intend to get in over your head financially. However, excessive use of credit cards can lead to large monthly bills that you may have difficulty paying. This may cause you to miss payments and fall behind on your debt. Your creditor may take several actions if you do not make your credit card payments.

Creditor Contact

As soon as you miss a credit card payment, your a collection representative employed by your creditor will likely call you to discuss your late payment. The creditor will also send you a late notice requesting you to bring your account current. If you do not respond, the creditor may refer your account to a collection agency, which will assume contact efforts on the creditor's behalf.

Fees

Creditors typically charge fees to your account when you miss a payment -- some will give you a grace period before assessing fees, while others will impose fees the day after your payment is due. You will typically incur a late fee for each month the account remains delinquent. If late fees and interest charges cause your balance to exceed your available credit limit, the creditor will also typically assess an overlimit fee each month. The fee amounts vary by creditor.

Demand Letter

If you continue to ignore your creditor or the collection company it has hired to contact you, the creditor or agency may send you a demand letter. This letter demands that you pay the full balance of your account, and states the date by which you must pay. In some cases, the creditor may also include options for reinstating your account by setting up a repayment plan or agreeing to another solution.

Legal Action

Failure to respond to a demand letter issued by a credit card company or collection agency may force the creditor to pursue legal action for recovery of the debt. The creditor or collection agency could file a civil lawsuit against you in county or district court -- after giving you an opportunity to respond to the suit, the court will issue a judgment. After obtaining a judgment, the creditor may pursue garnishment of your bank account funds and place a lien on your personal property. In most states, it may also garnish up to 25 percent of your post-tax wages to apply toward your debt.