What Happens When Your Credit Card Company Won't Work With You?

Credit card companies are often willing to help debtors by offering them restructuring or renegotiating possibilities. However, sometimes credit card companies will not grant these options, even when a debtor formally requests them. The company may believe that the debtor has enough income to pay the debt as it is, or may simply not have enough funding to enter into any more negotiation processes. The type of card may also limit the amount and type of negotiations available. In these cases, there are several different ways the debt can progress.

Opting Out of the Account

Opting out is a term used to describe the ability of debtors to pay off the card completely and close the account. This opting out period is granted to card holders when the credit card company suddenly changes the terms of the credit -- raising interest rates, for instance. The debtor opts out of the change, at which point the company closes the account and demands payment for any remaining balance. At least a 15-day warning is required in these circumstances. Opting out can be a useful strategy for solving a problem early on and avoiding fees and other issues.

Debt Consolidation

Debtors do not need to depend on credit card companies to help solve their debt problems. Debt consolidation is the process of replacing old debts with a new loan that closes all the older accounts starts a new type of debt, preferably with better terms. A debtor can use a refinance or second mortgage to pay off several credit cards at the same time, avoiding problems associated with late fees and rising rates which may otherwise cause issues.

Defaulting on the Card

If the debtor keeps the balance on the card but cannot make payments, the late debt will eventually result in defaulting on the card. At this point, the credit card company will consider the balance in danger of never being paid back. The maximum interest rate and amount of fees will be applied to the account. A default can make credit cards very difficult to pay off and it also has a very negative impact on debtor credit.

Legal Actions

Sometimes a defaulted credit card account can make a credit card company more willing to discuss renegotiation options and change the debt, but in other cases the default will make it even less likely that the debtor will be able to pay the balance. After several months the credit card company will typically sell or give the debt to a third party collection agency. This agency, after attempting to harass the debtor into paying, may file for a legal action to force payment through court-mandated selling of assets.