There’s a common misconception that credit card companies will simply send unpaid accounts to collections, damage your credit, and eventually give up. Unfortunately, that isn’t always how it works.
Can a credit card company sue you? Yes. If you stop making payments, the credit card company may eventually file a lawsuit to recover what you owe. The creditor may also charge off or sell the account, and a debt collector or debt buyer could later sue instead.
However, a lawsuit generally isn’t the first thing that happens after a missed payment. There may be opportunities to deal with the debt long before you reach that point. And even if you’re sued, filing a lawsuit doesn’t automatically mean the creditor or collector wins.
Understanding what happens between that first missed payment and a potential court judgment can help you decide what to do next.
Key Takeaways
- A credit card company can sue you over unpaid debt, but lawsuits typically occur after other collection attempts have failed.
- Your original creditor may not be the company that eventually sues you. A collection agency or debt buyer may pursue the debt instead.
- Never ignore a debt collection lawsuit. Failing to respond could result in a default judgment against you.
- Being sued doesn’t automatically mean you’ll lose, but successfully defending a legitimate debt can be difficult.
- Addressing unaffordable credit card debt early may give you more options, including hardship programs, debt consolidation, or debt relief.
When Do Credit Card Companies Sue You?
There’s no universal number of missed payments or a dollar amount that automatically triggers a credit card company to sue.
Typically, the process begins something like this: You miss a payment, the creditor contacts you, additional payments become overdue, and collection efforts become more aggressive. Those efforts can include increasingly frequent phone calls, emails, and letters requesting payment, offers to establish a payment plan, and eventually contact from a collection agency.
Eventually, if enough payments are missed, the creditor may charge off the account, send it to collections, sell it to a debt buyer, or consider legal action. Here’s what those terms mean:
Charge off the account: The credit card company writes the delinquent account off as a loss for accounting purposes. However, you still owe the debt, and collection efforts will continue.
Send it to collections: The creditor may hire or assign a collection agency to pursue payment on its behalf. The original creditor may still own the debt.
Sell it to a debt buyer: The creditor sells the debt to another company, often for less than the amount owed. That company then owns the debt and may attempt to collect it or pursue legal action.
Whether a lawsuit makes financial sense for the lender can depend on factors such as how much you owe, the creditor's policies, previous collection attempts, and applicable state law.
That means owing $5,000 doesn’t guarantee you’ll be sued, while owing a smaller amount doesn't guarantee you won't.
Another important distinction is who actually files the lawsuit. Your credit card issuer may decide against suing you and later sell the account. The company purchasing the debt may make a different decision.
From a Missed Payment to a Possible Lawsuit
Stage | What May Happen | What You Can Do |
Missed payment | Creditor contacts you and may assess late fees | Contact the creditor and ask about your options |
Multiple missed payments | Collection activity may increase | Ask about hardship or repayment programs |
Charge-off or collections | Account may be assigned to collections or sold | Verify the debt and explore solutions |
Lawsuit | Creditor or collector seeks a court judgment | Respond by the required deadline |
Judgment | Creditor may pursue available collection remedies | Consider legal assistance and repayment options |
The important point is that there are usually several stages between “I can't make this payment” and “I'm being sued.”
If you're already struggling to keep up, our guide on what to do when you can't pay your credit cards explains some of the options available before the problem progresses further.
What Happens if a Credit Card Company Sues You?
Receiving court papers can be frightening. Ignoring them is one of the worst responses.
According to the Federal Trade Commission, responding to a debt collection lawsuit forces the collector to make its case. Among other things, the collector must establish that you owe the debt, that the amount claimed is correct, and that it has the legal right to collect it.
The FTC specifically recommends reviewing the lawsuit and your records carefully, including any debt validation information you've received. If the debt is old, whether the statute of limitations for filing a lawsuit has expired can also become important.
Most importantly, respond by the deadline stated in the court documents, even if you believe the debt isn't yours or that you don't owe the amount.
Troy Doucet, Attorney at Doucet Co., LPA, says, "Do not ignore a lawsuit from a credit card company or debt buyer or debt collection company. If you do not respond, you immediately lose. A tricky and advanced method of many debt collectors is to sit on a judgment for a year to 18 months before they try to garnish wages. This is because court rules usually allow defendants one year to reopen a case for not answering due to excusable neglect. By waiting, they strip a good method of reopening the debt back up from you." |
The FTC provides a useful overview of what consumers should do after receiving a lawsuit, including options for finding legal assistance. FTC: What To Do if a Debt Collector Sues You
Does Being Sued Mean the Credit Card Company Will Win?
A lawsuit is a claim against you, not a judgment against you.
Provided you respond by the deadline, the creditor or collector still has to establish its case. Depending on the circumstances, questions about the amount owed, ownership of the debt, documentation, applicable statutes of limitations, or whether collection laws were followed all must be answered.
That doesn't mean you should expect to beat the lawsuit.
If the debt is legitimate and properly documented, the creditor may have a strong case. Your chances can become considerably worse if you simply ignore the lawsuit because the court may issue a default judgment without hearing your side.
My Experience Being Sued Over Credit Card Debt
Today, I’m a certified financial educator and the author of this article. I spend much of my professional life researching, writing about, and explaining personal finance. But I didn’t learn every financial lesson from a textbook. Some of them I learned the hard way.
Many years ago, when I was young and dealing with credit card debt myself, I experienced a version of this firsthand. The original credit card company didn't sue me. However, a collection agency that later pursued the debt did.
When I received notice of the lawsuit, I responded before the deadline and waited for my court date. While I was waiting, the collection agency happened to be involved in a separate lawsuit concerning its collection practices. The company lost that case, and before my court date arrived, I received a letter informing me that my debt had been discharged as a result.
I wish I could say I won because of some brilliant strategy on my part, but that wouldn't be true. I got lucky. What I did do correctly was respond to the lawsuit on time.
That distinction matters. Had I simply ignored the lawsuit, the court potentially could have entered a judgment against me without ever hearing my side. Instead, I had responded and remained part of the process when circumstances involving the collector changed the outcome of my case.
My experience isn't evidence that you can fight a debt collection lawsuit and expect the debt to disappear. Most people won't have a collection agency lose an unrelated case while they're waiting for their own court date. But it taught me an important lesson: Being sued doesn't mean you've already lost, and responding can preserve options you may give up by doing nothing.
Ashley Morgan, Attorney/Owner at Ashley F Morgan Law, PC, says, "I also hear a lot of people say they are going to beat the lawsuit because they saw on TikTok or social media that debt collectors never have the paperwork or cannot legally collect the debt. I understand why those videos are popular, but I have also watched people lose cases because they relied on bad legal advice from the internet." |
What Happens if You Ignore a Credit Card Lawsuit?
Here's another misconception worth putting to rest: refusing to respond doesn't prevent the case from proceeding.
The FTC warns that a court can rule without hearing your side if you fail to respond or appear as required. The collector could receive a default judgment, meaning the court rules in the collector's favor because you failed to defend yourself.
Depending on state law and your circumstances, a creditor with a judgment may be able to pursue collection remedies such as garnishing wages or money in a bank account or placing a lien against property. Additional collection costs, interest, or attorney fees may also be awarded in some cases.
The specific protections and collection procedures vary by state, making legal assistance especially valuable once an actual lawsuit has been filed.
Can You Stop a Credit Card Lawsuit Before It Happens?
It's often possible to stop a credit card lawsuit before it happens, and that's one reason to take action before your debt reaches the lawsuit stage.
If you've only recently started struggling, contacting the credit card company may reveal options you didn't realize existed. Some creditors offer hardship programs, temporary payment reductions, modified payment arrangements, or other assistance.
However, what if your problem is bigger than one late payment?
That’s when it can make sense to look at your overall debt rather than simply figuring out how to make next month's minimum payment.
Consider Debt Consolidation or Debt Relief
If your credit card payments are becoming unmanageable, debt consolidation or debt relief may provide a way forward. Our review of the best debt consolidation companies compares several providers and solutions.
Debt consolidation generally works best if your credit score is good enough to qualify for favorable loan terms and you can afford the new payment. Debt relief may be another option worth considering if you’re already overwhelmed by unsecured debt and struggling to keep up.
Depending on your financial situation, options to investigate include these providers:
The best time to investigate these solutions is generally before a creditor sues you, not after. Waiting can reduce your available options and leave you reacting to deadlines rather than choosing a solution on your own terms.
Frequently Asked Questions
Conclusion
Can a credit card company sue you? Yes, but a lawsuit usually isn't the first step after you stop making payments, and being sued doesn't automatically mean the creditor wins.
There can be several opportunities to address credit card debt before it reaches a courtroom. Contacting your creditor, reviewing hardship options, consolidating debt, or investigating debt relief may provide a way forward before the situation escalates.
If you've already been sued, the strategy changes. Don't ignore the paperwork or assume the outcome has already been decided. Review the claim, meet the response deadlines, understand your rights, and consider getting legal help.
The sooner you deal with unaffordable credit card debt, the more control you're likely to have over what happens next.
About Author
Deane Biermeier
Deane Biermeier is a certified financial educator through the University of Minnesota and a respected authority in financial research, writing, and editing, renowned for his in-depth analyses and expert advice. With a distinguished career that previously spanned home improvement, real estate, and finance topics, Deane's role at Trusted Company Reviews focuses exclusively on finance. Deane has contributed to leading publications such as Forbes Home, US News and World Report, Newsweek Vault, and others. Since joining TrustedCompanyReviews.com in 2023, he has solidified his reputation as a crucial resource for clear, factual financial guidance.