How Often Do Credit Card Companies Sue for Debt?

Your credit card company will try to reach you if you fall behind on payments. Creditors can pursue all legally acceptable means to collect their money. A lawsuit is an option, but it’s not usually their first choice.

You may worry about being contacted or sued for non-payment. However, creditors don’t sue as often as you might think. Lawsuits can be costly, time-consuming, and frustrating for them.

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When Will a Credit Company Sue You?

Credit companies usually sue after 180 days of non-payment. The account must be officially charged off before they file a lawsuit.

Creditors decide to sue based on three key factors:

Account balance amount
Level of delinquency
Estimated likelihood of payment

Your chances of being sued increase with a higher account balance. Recent defaults and proof of assets also raise the risk. Employment income makes you a more attractive lawsuit target.

Most creditors have policies to respond to missed payments. They want to maintain good relationships with customers. A lawsuit wouldn’t be their first desirable means of resolution.

Credit agreements usually involve late-fee penalties or increased interest rates. These consequences come before legal action.

Companies weigh the costs and benefits before filing lawsuits. They make money from interest on debts. Before suing, they must determine if it’s worth the trouble.

Creditors consider the amount of debt and probability of recovery. Legal expenses factor into their debt recovery decisions.

Methods Creditors Try First

Before filing lawsuits, creditors typically use these collection methods:

Penalties for non-payment or late payments
Increased interest rates
Payment notifications
Credit card cancellation
Lowered credit card limits
Loss of benefits attached to timely payments

A credit card company will probably sue when you owe more than potential court costs. They’ll exhaust all other debt collection efforts first.

Example: Roger is being sued by Synchrony for a debt of $5,400 in California. When Roger fell behind, Synchrony tried contacting him multiple times. The company charged Roger fees and interest which made on-time payments harder. After months without contact, Synchrony sued because the debt amount justified legal action. Roger used our partner Solo to file an Answer and worked out a settlement payment plan.

How Long Before Credit Card Companies Sue?

Credit card lawsuits typically start after 180 days of non-payment. Companies usually wait around six months before taking legal action.

After collection efforts fail, the company may sell your debt. Debt collection agencies often purchase these accounts. When debt goes to collections, your credit score takes a major hit.

Debt collectors will reach out several times before filing lawsuits. The frequency depends on the agency involved.

What Are the Odds of Being Sued?

Consumers have about a 14.5% chance of being sued by credit card companies. The Consumer Financial Protection Bureau reports these statistics.

Credit card companies file lawsuits when debts range between $2,700 and $12,300. On average, creditors only go to court if you owe more than $2,700.

About 1 in 7 credit card accounts end up in court. The odds increase with larger balances and longer delinquency periods.

What Happens When Debt Transfers to Collection Agencies?

Credit card companies hand over debts to collection agencies when direct contact fails. Collection agencies are more persistent and experienced in debt recovery.

Debt collectors make profits from commissions after successful collections. They may be less lenient than credit card companies. However, the Fair Debt Collection Practices Act regulates their practices.

Agencies will regularly contact you through phone calls and collection letters. They may want to discuss a repayment plan with you. If these methods fail, a lawsuit becomes the next option.

Debt collectors often purchase old debt for a fraction of the original amount. They’re more likely to reach a debt settlement because of this.

You can negotiate with debt collectors to settle for less than you owe. Our partner Solo makes it easy to send and receive settlement offers online.

Credit Card Debt Collection Lawsuit Outcomes

Credit card debt lawsuits can have several possible outcomes. Understanding these helps you prepare your defense strategy.

Statute of Limitations

You can use the statute of limitations as your defense in court. The statute is the time limit companies have to sue you. Time limits differ by state and debt type.

After the statute expires, the debt becomes time-barred. Collection agencies can no longer file lawsuits against you for that debt.

In some states, the clock on debt can restart. Accepting in writing that you owe the debt can reset the timer. Collectors can still sue for the debt in that case.

Some state laws make it illegal to contact you about time-barred debt. Other states allow continued contact.

Judgment Proof Status

Debtors without enough assets, money, or garnishable income are judgment proof. Creditors won’t be able to collect anything from judgment proof debtors. Despite this, debt collectors can still file lawsuits.

Default Judgment

Courts pass default judgments when debtors fail to appear for hearings. Some people assume they have no chance against debt collectors. They choose to ignore court summons as a result.

You’ll never know what defenses you had available if you ignore summons. You won’t know whether the debt is actually yours. Ignoring a lawsuit is never a good idea.

Failing to respond within the deadline means you lose by default. Creditors or debt collectors can then garnish your wages. They can also put liens on your property.

Respond Immediately to Credit Card Lawsuits

You can increase your chances of winning by responding with a written Answer. The most important action is to respond before the deadline.

Ignoring a lawsuit guarantees you’ll lose by default. Creditors gain the right to garnish wages and seize property. You must protect yourself by taking action.

Our partner Solo can help you file your Answer for credit card lawsuits. Filing an Answer increases your chances of winning exponentially.

Your Chances of Winning a Credit Card Lawsuit

Your chances of winning increase by 7x when you respond to lawsuits. Most credit card debt lawsuits end in default judgments. Consumers who fail to respond in time lose automatically.

Filing an Answer blocks a default judgment. Your chances of winning improve dramatically, especially against debt buyers. Companies like LVNV Funding or Midland Credit Management are easier to beat.

The simple act of responding changes everything. You give yourself a fighting chance in court.

How Often Do Collection Agencies Sue?

Collection agencies sue very often. The CFPB reports that 15% of American consumers have been sued by debt collectors.

Debt collection cases make up the majority of civil cases filed. About 40% of civil dockets consist of debt collection lawsuits. Debt collection lawsuits continue to increase as consumer spending returns to pre-pandemic levels.

You can increase your chances of winning simply by responding. Our partner Solo can help you draft and file an Answer into your case.

How to Resolve Your Debt

You have multiple options to resolve debt with debt collectors. Responding to lawsuits is the first critical step.

You can send letters to collectors and negotiate settlements. Settlement offers often result in paying less than you owe. Online tools make the process simpler and faster.

No matter where you are in the debt collection process, help is available. You can take control of your situation and protect your rights.

Frequently Asked Questions

How long do credit card companies wait before suing?

Credit card companies typically wait 180 days (about six months) after the first missed payment before filing a lawsuit. They'll usually try other collection methods first, including late fees, increased interest rates, phone calls, and letters. After the account is officially charged off, they may sue or sell the debt to a collection agency.

What is the minimum debt amount for credit card companies to sue?

Credit card companies typically sue when you owe between $2,700 and $12,300. On average, creditors only go to court if you owe more than $2,700. The decision to sue depends on whether the debt amount exceeds potential court costs and legal expenses.

Can I still be sued after the statute of limitations expires?

Debt collectors cannot successfully sue you after the statute of limitations expires. The debt becomes time-barred, meaning courts will dismiss lawsuits for that debt. However, in some states, the clock can restart if you acknowledge the debt in writing or make a payment. Some states also allow collectors to continue contacting you about time-barred debt.

What happens if I ignore a credit card lawsuit?

Ignoring a credit card lawsuit results in a default judgment against you. The court automatically rules in favor of the creditor or debt collector. They can then garnish your wages, put liens on your property, and freeze your bank accounts. You lose all opportunity to present defenses or negotiate a settlement.

How do I respond to a credit card lawsuit?

You must respond to a credit card lawsuit by filing a written Answer with the court before the deadline stated in your summons. Your Answer should address each claim made against you and include any defenses you have. Filing an Answer blocks a default judgment and increases your chances of winning by 7x. You can use online tools or work with attorneys to draft and file your response.

How Often Do Credit Card Companies Sue for Non-Payment?