How do credit card companies handle past due payments?

Typically, the process to collect a debt will follow the same route for most consumers who have missed payments on their obligations. First off, the original creditor (the lending institution that lent you the funds) will make an attempt the collect the past due amount. If the creditor cannot collect a payment from you, they will then send (or possibly sell) the debt to an another collection agency who will make further effort to collect the debt, and if that has no affect, then they may choose whether or not to send the account to an attorney in your state who will take legal action to collect the full amount owed.
In some cases, the debt will never be transferred over to an attorney, but in other instances, the original lending institution may send your account immediately to an attorney to collect full payment. Everyone’s situation is unique and the results will definitely vary depending consumer’s specific circumstances.   
Below we will discuss the five stages most creditors take in efforts to collect a debt.
Step 1: Reminders to pay
Once you are about thirty days past due on your debts, you will start receiving reminders about the past due amount. Whether it be through the mail or they contact you personally the creditor will calmly notify you about the missed payment. During this time, the borrower will be penalized with late fees and possibly even see an increase in interest rates.
Step 2: The creditor will start reporting late payments to the credit bureaus
This typically this occurs when the borrower is more than sixty days past due,  however, some creditors will do this immediately once a payment is missed. Keep in mind that this will take a negative tole on your credit rating and may even start to increase your interest rates.
Step 3: Collection activity will begin to increase

It does not matter if the account is 60, 90, or even 120 past due, you will find most credit card companies will bombard the borrower with collection calls.
Step 4: Possible charge off
Once the debt becomes 120, 150, or 180 days overdue, most creditors will charge off the account. This helps saves creditors money at the end of the year when taxes are due because the write the debt off the company’s books and report it as a loss. The charge off will also typically go on the borrower’s credit report as well, in turn having a negative affect on their credit score.
Step 5: Debt transferred to a third party
After the debt has been charged off, they will then typically either assign the debt to a collection agency, or send the debt to an attorney to pursue legal action.

How do you deal with past due accounts?
If you have past due payments or your debt has been charged off, it is likely you are in need of help to avoid being sued for the amount owed. One thing you can try to do is negotiate a settlement for the amount owed. Debt settlement will involve negotiating with your creditor in efforts to lower the total amount owed, in some cases you can negotiate up to 50% (or more) of the balance to be canceled.
Another option would be to go through credit counseling. Credit counseling can be beneficial as it may assist you by combining multiple debts into one account, help lower your current interest rates, and possible even help negotiate the late fees be waived from your account. Keep in mind that not all credit counseling companies are legitimate so you need to be careful before hiring someone for help. One reputable credit counseling company we found is Money Management International and Consumer Credit Counseling Service (CCCS).