If you have a big credit card debt and believe that the bank will simply forego it since the debt is unsecured, then you are being delusional. A credit card company has all the right to take the defaulter to court. While most credit card users feel that the only implication of non payment of credit card bill is the loss of credit score, there is often more than what meets the eye. And so is in this case.

Although a bank doesn’t take the defaulters to the court of law as the first recourse. At the outset, it will send reminders to the defaulter, Then it will typically engage with the card user through collection agencies. And when everything else fails, the bank is entitled to take a legal action to recover the dues.

These are some of the steps banks typically take to recover credit card debt:

1. First of all, the bank tends to send reminders via SMS, calls, and emails.

2. In case the debt still remains unpaid, the bank may engage third-party collection agencies to recover the dues.

3. After all these efforts fail, the bank may start legal proceedings to recover the debt.

4. The legal options that the bank may use include the following:

a. The bank can file a civil suit under the Negotiable Instruments Act, 1881, if cheques issued for payments bounce, or under general contract laws for breach of credit agreement.

b. In a few rare cases, bank may file criminal charges, particularly if fraud or intentional default is suspected.

c. When the unpaid amount is large, banks can approach the Debt Recovery Tribunal (DRT) as well.

3. Loss of credit score: When a credit card user doesn’t pay on time, it will lead to a negative entry in the credit report, thus hampering the user’s creditworthiness.

However, most banks refrain from approaching the court as it is time-consuming and expensive.

Legal action is usually seen as a last resort. Therefore, it is advisable to negotiate with the bank for settlement or restructuring the debt.

If you are finding it difficult to clear your credit card debt, you may check with your bank whether it would permit repayment in equal instalment. Else, you may even consider raising a personal loan to repay your credit card debt.

Alternatively, you may consult with the bank to consider waiving off interest or late payment charges if you are keen to clear the entire bill in one go. At times, banks tend to give waiver when long due bills are offered to be cleared.