Can Credit Card Companies Sue You for Debt?
Lawsuits typically follow default: Most suits come after about 180 days of nonpayment, when the account is charged off and may be sold to a collection agency that inherits the right to sue.
Never ignore a summons: If you don't respond within the stated window (often 20 to 30 days), the court can enter a default judgment, opening the door to wage garnishment or bank levies.
No longer on credit reports: Civil judgments haven't appeared on the three major credit reports since 2017, but the missed payments and charge-offs behind them still hurt your score.
Yes. Credit card companies can sue you for unpaid debt, and legal action becomes more likely the longer an account goes unpaid or the larger the balance grows. However, lawsuits are expensive and time-consuming, so they almost always sue as a last resort.
Here's when credit card companies are likely to sue you for nonpayment, how to prevent that outcome in the lead-up, and what to do if the bank takes you to court.
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When Does a Credit Card Company Sue for Missed Payments?
Credit card companies can sue for any amount at any time after your account becomes delinquent. However, the balance owed must justify the expense of pursuing legal action. Lawsuits are usually reserved for balances of $1,000 or more, and the typical timeline is as follows:
First 30 days: If you miss your due date, don’t panic. The card issuer may charge a late fee, but it won’t report a missed payment to the credit bureaus until 30 days pass without hearing from you, and your score won’t be impacted if you pay by then.
30 to 90 days past due: Your account is officially considered delinquent, a status that's hard to miss. Your credit score can fall substantially during this period, especially if you started with good credit, and you should expect frequent calls and notices from the bank's internal collections department.
120 days past due: Your account is now severely delinquent. Your score continues to plummet and the collection efforts intensify.
180 days past due: After six months, your credit card account officially defaults, and you’ve reached the critical breaking point. This is when the card issuer is likely to charge off your account, or write off the debt as a loss, although some pull the trigger at 120 days — but that does not mean the debt is forgiven. At this point, the credit card company is likely to sue you or sell your debt to a third-party collection company that buys your debt — and the right to sue.
What Should You Do if a Credit Card Company Sues You?
Follow these steps if a credit card company or collection agency sues you to limit the damage and regain control of your financial life.
Respond immediately: The threat of legal action can feel intimidating, but ignoring it tends to make things worse. If you don't respond within the timeframe stated in the summons — usually 20 to 30 days — the lawsuit can proceed without you. Since the court only hears one side, it will typically enter a default judgment against you, which gives the bank expanded power to collect, including the ability to garnish wages or levy bank accounts in many states.
Verify the debt: Request a written summary of the debt.
Challenge inaccuracies: If you notice errors or believe any charges were fraudulent, contest them in writing.
Ensure the statute of limitations hasn’t passed: Lenders must act promptly, and statutes of limitations vary by state. Check that the plaintiff has legal standing to sue.
Document everything: Create and maintain records of all correspondence, payments and legal notices.
Consider seeking legal help: Consult an attorney or legal aid organization if the debt justifies the expense and potential consequences, and ask the court if mediation is available as an alternative.
Can Credit Card Lawsuits Hurt Your Credit Score?
As of 2017, civil judgments no longer appear on your credit report, but they don’t have to for your score to suffer serious, lasting damage from being sued over unpaid credit card bills.
Payment history is the most important factor in your credit profile, accounting for 35% of your FICO score, and a single missed payment can cause a steep drop if you started with strong credit. The hit tends to be smaller for those who already have lower scores, but it still adds up as more payments are missed.
By the time the bank sues you, you’ve already passed delinquency, moved to severe delinquency and eventually defaulted on the loan. Except for bankruptcy, few things do more lasting harm to your credit profile.
When the bank charges off the account, your score can take another significant hit on top of the damage from the missed payments that led up to it.
How To Avoid Lawsuits From Credit Card Companies
An ounce of prevention is worth a pound of cure — especially when it comes to credit card debt.
Use lines of credit responsibly: Don’t charge more than you can cover in a given month, don’t use credit cards as an emergency fund, pay your statement balance in full each billing cycle, and set up automatic withdrawals.
Communicate: As soon as you miss your first payment deadline, card issuers will try to contact you — this is a crucial window of opportunity. The golden rule is never to ignore a debt. Communicate with your lender, establish hardship, if applicable, and ask about a revised payment plan, forbearance or another mutually satisfactory course of action.
Know your rights: According to the Consumer Financial Protection Bureau (CFPB), federal statutes like the Fair Debt Collection Practices Act and Fair Credit Reporting Act, as well as many state laws, govern how, when and under what circumstances lenders can pursue borrowers and take them to court. For example, they can't threaten lawsuits they don’t intend to file, and they must pursue the debt in a timely manner. They also can't seize funds from your bank account.
Key Terms
Delinquency: A payment past its due date; accounts are typically reported delinquent at 30 days and grow more serious over time.
Charge-off: When a creditor writes the debt off as a loss, usually around 180 days past due — but you still owe the balance.
Default judgment: A ruling entered against you when you don't respond to a lawsuit, giving the creditor expanded collection powers.
Wage garnishment: A court-ordered deduction from your paycheck to repay a debt, available to creditors with a judgment in many states.
Statute of limitations: The window during which a creditor can sue to collect, which varies significantly by state and depending on whether the debt involved a written or oral contract. Check your state's current rules before assuming a debt is too old to collect.
Fair Debt Collection Practices Act (FDCPA): The federal law limiting how third-party collectors can contact and pursue you.
Debt buyer: A company that purchases charged-off debt, often for pennies on the dollar, and may sue to collect it.
Civil judgment: A court ruling that you owe a debt; since 2017 these no longer appear on the big three credit reports but remain public records.
Sources
myFICO: What's in my FICO Scores?
Parts of this article were created with AI assistance. MoneyLion editors reviewed, fact-checked and edited the final version and are responsible for its accuracy.
Emily Gadd, CCC™, contributed to editing this article.
Photo Credit: AsiaVision / iStock.com
FAQs
If you can't pay a judgment, the creditor may pursue wage garnishment, bank levies or liens depending on your state's laws. You can ask the court about a payment plan, try to negotiate a settlement or look into debt relief options. Ignoring the judgment usually makes collection efforts more aggressive, so it helps to respond and explore your options as soon as possible.
It depends mostly on your balance and how long you've gone without paying. Lawsuits are more common once a debt reaches $1,000 or more and has gone unpaid for several months, since smaller balances often aren't worth the cost of litigation. Many delinquent accounts are settled or sold to collection agencies instead of going to court.
Yes, every state sets a time limit on how long a creditor can sue you over unpaid debt, and the limit can vary depending on whether the account involved a written contract. Once that window closes, the debt may still exist, but a court can dismiss a lawsuit filed too late. Check your state's rules to know your timeline.
Generally no. If a collector sues knowing the statute of limitations has passed, it may violate the Fair Debt Collection Practices Act (FDCPA). You can raise the expired statute as a defense in court, which often leads to dismissal. Collectors may still ask for voluntary payment after the deadline passes, but you aren't legally required to pay.
A threat to sue is just a warning, often used to pressure you into paying. An actual lawsuit begins only when you're formally served with a summons and complaint, typically in person or by certified mail, not through a phone call, email or voicemail. Collectors can't legally threaten to sue if they have no real intention of filing.
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