When Will a Debt Collector Sue You? Timeline & What to Expect

Though there’s no standard timeline, you face the highest risk of a debt collection lawsuit after six months of nonpayment. When you stop making timely payments, your creditor will first send notices. These attempts may continue for several weeks before escalating. Eventually, the creditor may sell your debt to a collection agency. If the collector can’t get payment, they may file a lawsuit against you.

When Do Debt Collectors Sue for Nonpayment?

There’s no set timeline for debt collection lawsuits. The risk increases around six months after missing a payment.

Most creditors prefer collecting payment without going to court. They start with letters, emails, and phone calls about unpaid debt. If they can’t get a response or payment, they may sell the debt or sue you.

If a debt collector sues, they may seek a court order for wage garnishment or bank account levy. However, not all debts follow the same timeline. How soon you might face a lawsuit depends on three factors: your credit agreement, the debt type, and who owns it.

Check Your Credit Agreement

Your credit agreement terms dictate when your account enters default. Some agreements require mediation or arbitration before lawsuits. Some set clear deadlines, while others give creditors discretion.

For debts without credit agreements—like medical bills—there’s no set waiting period. Creditors could file a lawsuit after just one missed payment. Because lawsuits are expensive, they typically try other collection methods first.

Different banks, credit card companies, and collection agencies follow different timelines. Original creditors are less likely to file lawsuits than third-party collectors. Third-party collectors tend to be more aggressive with legal action.

Why Debt Collectors May NOT Sue You

Creditors and collectors must spend time and money to sue you. They usually hire a lawyer licensed in your area. They pay court filing fees and costs to serve you with a summons.

Even if they win and get a judgment, expenses continue during collection. If you don’t have money to pay the judgment, the creditor can’t recover lawsuit costs.

What Factors Do Debt Collectors Consider Before They Sue You?

Lawsuits are expensive and time-consuming. They aren’t usually the first solution creditors use. However, some borrowers face higher lawsuit risk than others.

Lawsuits are more common in states with creditor-friendly wage garnishment laws. They’re also more common for individuals with multiple debts in collections.

People with two or more debts in collections are significantly more likely to be sued. In states with fewer wage garnishment restrictions, collectors may pursue legal action for smaller debts. The Consumer Financial Protection Bureau recently published a study confirming this.

Most creditors and debt collectors consider several factors when deciding whether to sue:

• Where you live
• How much debt you owe
• How old the debt is
• How many debts you have in collections

Where You Live

Your state’s laws have a huge impact on lawsuit likelihood. The CFPB report shows your state laws determine:

• How much it costs to sue you: Filing fees, court costs, and average lawyer hourly rates in your area
• Allowable interest rates: Whether your state allows creditors to add ongoing interest to judgments
• Likelihood of winning: What your state requires creditors to prove for a judgment
• Wage garnishment restrictions: The CFPB study found a creditor’s decision to sue correlates closely with wage garnishment laws

State law plays a big role in your lawsuit risk. Borrowers in some states are much more likely to be sued than those in other states.

How Much Debt You Owe

Lawsuits are expensive. Many creditors and collection agencies won’t file one if the debt amount isn’t worth the effort. The median debt collection judgment amount was around $1,600 as of 2016 according to the CFPB. That said, roughly a third of collection judgments were for $1,000 or less.

The CFPB study also found that where there were fewer state limits on wage garnishments, the threshold amount to file a lawsuit was lower.

The Statute of Limitations (Age of the Debt)

Another important factor debt collectors should keep in mind is the statute of limitations. Statutes of limitations for debt are state laws. They dictate how long a creditor has to bring a debt collection claim in court.

The laws vary by state and by debt type. The statute of limitations for credit card debt often ranges from 3–6 years. In some states it may be longer.

Unfortunately, some debt collectors will try to sue on time-barred debt. The court will not automatically dismiss the case. You must respond to the lawsuit and raise this defense to get the case dismissed.

If you’re worried about responding on your own but can’t afford a lawyer, you can draft an answer letter using our partner Solo. They’ve helped over 280,000 people respond to debt lawsuits. They have a 100% money-back guarantee.

How Many Debts You Have in Collections

The CFPB study suggests most creditors consider roughly the same factors. That’s bad news for consumers with more than one debt in collections. If one creditor decides you’re worth suing, others probably will too.

About 1 in 7 (15%) consumers contacted about a debt reported being sued. The CFPB’s 2017 survey Consumer Experiences With Debt Collection found this.

The same survey found that individuals with 2–4 debts in collections were more than twice as likely to be sued. For people with five or more debts, the lawsuit likelihood doubled again.

What Should You Do if You’re Sued for a Debt?

Being served with court papers is stressful. If you get sued for a debt, take a deep breath and prepare to fight back.

You’ll need to put in effort. If you fail to answer the lawsuit, the judge will likely award a default judgment. If this happens, the debt collector can use more tools to collect. These include bank account levies and wage garnishments.

First and Foremost: Respond to the Lawsuit

You may think winning is a long shot. But most debt collectors’ main strategy is hoping you don’t show up to court.

Prove them wrong by responding to the court summons and complaint. Though it may feel intimidating, you can answer a court summons without an attorney.

If you want legal advice or help, act quickly. If you can’t afford a lawyer, see if you qualify for free legal help. Check for a legal aid or volunteer attorney organization in your area.

You can also draft an answer letter for a small fee using our partner Solo. They’ve helped over 280,000 people respond to debt lawsuits. They have a 100% money-back guarantee.

Can You Negotiate With a Debt Collector to Avoid a Lawsuit?

Probably. Debt collectors are often willing to negotiate with consumers. They want to avoid legal costs or not getting paid at all. You can try to negotiate a debt settlement or repayment plan.

If you haven’t received a court summons, communicate with your debt collector. Try to settle the debt before they take legal action. If you reach an agreement, you’ll avoid attorney fees, court costs, and time in court.

If you have received a court summons, respond to the summons and contact the debt collector. If you don’t answer the summons, the collector can move forward with the case. This happens even if you’re negotiating to settle the debt.

What Is Debt Settlement?

Debt settlement is a debt-relief option. You negotiate a partial payment on a debt. The rest is forgiven. In exchange for this forgiveness, you usually make one lump-sum payment. In some cases, you may negotiate a payment plan. This is less common because there’s a default risk.

Debt settlement can bring serious relief. It also comes with consequences you should know. First, it’s usually listed on your credit report as “debt settled for less than the full amount owed.” This will likely negatively affect your credit score.

You may also have to pay income tax on the forgiven debt.

What if You Can’t Afford to Pay the Debt?

Many people avoid debt collectors or choose not to respond to lawsuits. They do this because they can’t afford to pay. After all, if you could’ve paid it off, you probably would have already.

But avoiding the debt won’t make it go away. If you’re struggling to make ends meet, it’s time to get support.

Try Credit Counseling

Credit counseling is a great place to start for many people. A nonprofit credit counselor can look at your situation. They can help you understand your debt relief options.

They may suggest debt consolidation, a debt management plan, or bankruptcy. The good news is that the first session is usually free!

Credit counselors can help with credit card debt, medical bills, and other consumer credit. There are also certified credit counselors who can help with student loans.

Our partner Cambridge Credit Counseling can review your debts and create a personalized plan to help you become debt-free.

Bankruptcy Can Stop the Lawsuit and Clear Many Debts

If you’ve tried everything to address your debt, it may be time to consider bankruptcy. Bankruptcy gives tens of thousands of people a financial fresh start each year.

Bankruptcy can erase most unsecured debts. These include medical debt, credit card bills, and other past-due bills. You can also apply to erase federal student loans. This requires an extra step called an adversary proceeding. Guidelines around student loan bankruptcy have changed recently. The success rate is unknown, but it’s worth trying if you’re filing bankruptcy anyway.

Like everything, bankruptcy has pros and cons. One major benefit is immediate protection from collection activities. The automatic stay provides this protection. This includes lawsuits for credit card and other consumer debt.

Dealing With Debt Collectors? Know Your Rights

If you’re feeling daunted by debt collectors, knowing your rights can help. The major federal law protecting consumers is the Fair Debt Collection Practices Act (FDCPA).

The Consumer Financial Protection Bureau and Federal Trade Commission enforce this law. If a debt collector violates state laws, you can file a complaint with your state attorney general.

Under the FDCPA, debt collectors must provide a validation notice. This written notice must be sent prior to or within five days of first contact.

Among other things, the validation notice must tell you the creditor’s name. It must give details of the debt. It also must include information about your right to dispute the debt. If you haven’t received a debt validation letter, you can request one. If you don’t get one, this may be a scam.

If a debt collector fails to provide a validation notice, this violates the FDCPA. Making harassing phone calls also violates the FDCPA. You can report them to the CFPB or sue for damages.