If you stop paying your credit cards, it is possible, but highly unlikely if you have a lot of unsecured debt(e.g. credit card, medical bills, collection/charge-offs).
Creditors and debt collectors of unsecured debt do have a right to pursue legal action to collect an unpaid debt.
However, it's a big risk to sue a debtor that has defaulted. Therefore, the vast majority of debt collectors would prefer to settle, rather than sue. The cost of suing is usually greater than the amount that the debtor owes the creditor. Besides, even if the debt collector wins a judgment in court, and the debtor has little or no assets, how can the debt collector collect?
If You Have a Substantial Amount of Assets, Stop Paying Your Credit Cards Is Not Recommended
If your creditors believe that you possess a significant amount of assets (e.g. cash, stocks, bonds, equity in a property, etc.), they may pursue legal action. However, if you don't have many assets, or a large savings account, it's unlikely that debt collectors will sue.
They may serve a debtor with a summons to appear in court, but that's usually a scare tactic in order to get the debtor to pay the unpaid debt. Even if the debt collector follows through with the lawsuit, the debtor may negotiate a payment plan or a settlement with the creditor before the court date.
The Gamble Creditors Must Take To Sue
If debt collectors exercise their option to sue, here's the process that they typically follow:
1. Perform an asset investigation. This is an inquiry that determines the approximate value of a debtor's assets.
2. Hire an attorney to represent the debt collector.
3. Pay required court fees.
4. Obtain a judgment from the court.
5. Worry about the debtor selling his/her assets and emptying his/her bank accounts in order not to pay the judgment amount.
6. Even if the debt collector obtains a judgment, there is no guarantee that the creditors will ever get paid. You can't force someone to pay a delinquent debt if he doesn't have the funds.
Due to the above pitfalls, the vast majority of creditors would much rather settle than sue. They are like any other "for profit" business. It's usually more profitable for them to accept a settlement offer.
Therefore, stop paying your credit cards may be an effective strategy for those that are distressed.