Unless you plan to change your identity and/or move out of the country, you will not be able to walk away from debt without repercussions. Whether a car or house loan through your local bank, or a crushing heap of credit card debt to a faceless company three states away, the odds are stacked precipitously against the notion that creditors will let you stop payments without making an effort to collect. Whether or not the ultimate price you pay in aggravation, long-term credit report damage and possible court action is worth it is for you to decide.
In-House Collection
A credit card company will pursue an in-house collections process for about 180 days. This approach will begin with phone calls and letters after you are 30 days late with a payment and will escalate into more persistent contact with stronger language as time passes without your debt being addressed. Most consumer debt holders will pursue this strategy, though if the debt you ignore is a mortgage, the bank will likely start a foreclosure action after you have missed two or three payments, which will allow the lender to ultimately take possession of and sell your house.
Collection Agency
After six months, most credit card companies and other types of consumer debt holders will write off your account as bad debt. This is an accounting technique solely done for the purpose of record keeping. It doesn't mean you're off the hook. Usually, bad debt is sold to a third party, known as a collection agency, which will begin the process of letter writing and phone calls all over. If you dodge their efforts long enough, there's a good chance the next step will be wage garnishment or a lawsuit.
Lawsuit
While there is no such thing as a debtor's prison in modern America, you can be prosecuted and found liable for your debt and, if you fail to show up in court to defend yourself, can have a judgment rendered against you. This simply means that a judge has decided you do owe the money and must pay it back. For the creditor to actually collect on the judgment is a different matter. A motivated collection agency might file further paperwork with the court to have your checking account debited or certain personal property seized by the sheriff and sold.
Garnishment
Garnishment is the process by which a portion of your wages are withheld from each paycheck, no more than 25 percent, and used to pay off debts. Different creditors resort to this at different points in their collection strategy, though if you have a judgment against you, the judge might be willing to sign an order of garnishment, which your employer is bound by law to obey.
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