Credit card companies rarely sue, but it depends on the debt size and how long you have not paid
Most credit card companies do not sue for unpaid balances under $5,000. The cost of filing a lawsuit, hiring a lawyer, and going to court often exceeds what they would recover, so they pursue other methods first: selling the debt to a collection agency, reporting it to credit bureaus, or using internal collection calls and letters. When they do sue, it is usually on accounts that are $10,000 or higher and have been unpaid for six months to two years.
The decision to sue varies by card issuer, the state where you live, and how aggressively that company's legal department operates. Capital One and Discover are known to sue more often than American Express or Citi. Some issuers never sue and instead sell the debt outright to third-party collectors. Your state's laws also matter: some states make it harder or more expensive to collect on credit card debt, which discourages lawsuits.
If a credit card company does sue, you will receive a summons and complaint in the mail or by a process server. You have a specific number of days to respond—usually 20 to 30 days depending on your state. Ignoring the summons is the worst choice you can make, because the creditor can win by default and then garnish your wages or freeze your bank account without ever proving you owe the money.
Key Takeaways
- Credit card companies are more likely to sue on debts over $10,000 that have gone unpaid for at least six months, because smaller debts do not justify the legal cost.
- Most unpaid credit card debt is sold to collection agencies instead of being pursued in court by the original issuer.
- If you receive a summons, you must respond within the deadline set by your state or the creditor can win a judgment against you without a hearing.
- A judgment allows the creditor to garnish your wages, freeze your bank account, or place a lien on property, depending on your state's laws.
What happens before a lawsuit is filed
Before a credit card company sues, they will try to collect the debt themselves. This usually starts with phone calls and letters from their internal collection department. These calls and letters must follow the Fair Debt Collection Practices Act (FDCPA), which means they cannot threaten you, call before 8 a.m. or after 9 p.m., or contact you at work if your employer forbids it.
After 60 to 180 days of non-payment, the credit card company typically sells the debt to a third-party collection agency for a fraction of what you owe—often 10 to 30 cents on the dollar. At this point, the original card issuer is out of the picture. The collection agency now owns the debt and has the right to sue. Collection agencies sue more often than card issuers do, because they buy debt in bulk and can afford to pursue smaller balances in court.
Throughout this period, the unpaid account is reported to the three major credit bureaus: Equifax, Experian, and TransUnion. A late payment stays on your credit report for seven years from the date you first missed a payment. This damage happens whether or not you are sued.
How much debt triggers a lawsuit
There is no fixed dollar amount that guarantees a lawsuit, but the economics of litigation create a practical floor. Filing a lawsuit costs $200 to $500 in court fees alone, plus attorney time. If the debt is $2,000, the creditor may recover the full amount but lose money on legal costs. If the debt is $15,000, the math works in their favor.
Collection agencies, which buy debt in volume, sometimes sue on balances as low as $3,000 to $5,000 because they have negotiated lower legal fees and can file multiple suits at once. Individual card issuers rarely sue on anything under $5,000. The exact threshold varies by company and by state—suing in small claims court (which has lower filing fees but caps the amount you can recover) is cheaper than filing in civil court.
The age of the debt also matters. A debt that is two years old is more likely to be sued on than a debt that is three months old, because the creditor has already written it off as a loss and is now pursuing recovery as a secondary goal. A very old debt—past the statute of limitations in your state—cannot be sued on at all, though the creditor may not know this and may try anyway.
The statute of limitations on credit card debt
Every state sets a statute of limitations on credit card debt, which is the deadline for filing a lawsuit. This period ranges from three to ten years depending on your state. Once the statute of limitations expires, the creditor can no longer sue you, though they can still try to collect the debt and report it to credit bureaus.
The clock starts on the date you last made a payment or last charged something to the card. If you make a payment after missing one, the clock may reset in some states. If you acknowledge the debt in writing—for example, by responding to a collection letter and admitting you owe it—the clock may also reset. This is why you should never confirm a debt in writing unless you are negotiating a settlement.
The statute of limitations does not erase the debt or make it disappear from your credit report. It only prevents the creditor from suing. They can still call you, send letters, and report the account as delinquent. If you move to a state with a longer statute of limitations, the creditor may be able to sue you there under that state's timeline.
What happens if you are sued
If you are sued, you will receive a summons and a complaint. The summons tells you when and where to appear in court or when you must file a written response. The complaint explains why the creditor is suing and how much they claim you owe. You must respond within the deadline—usually 20 to 30 days—or the creditor can ask the court for a default judgment.
A default judgment means the court rules in the creditor's favor without hearing your side. Once a default judgment is entered, the creditor can garnish your wages (take money directly from your paycheck), freeze your bank account, or place a lien on your home or car. These remedies vary by state. Some states protect a portion of your wages from garnishment; others do not.
If you respond to the summons on time, you have a chance to defend yourself in court. Common defenses include proving the debt is not yours, showing that the statute of limitations has expired, or demonstrating that the creditor cannot prove you owe the amount they claim. Many creditors file suit without having complete documentation, and if they cannot produce the original credit card agreement or statements showing the charges, the case may be dismissed.
How to respond if you receive a summons
Do not ignore a summons. Contact the court listed on the document and ask for the deadline to respond. In most states, you have 20 to 30 days. You can respond by filing a written answer with the court, which costs little or nothing. Your answer should deny the claims you dispute and raise any defenses you have—for example, that the debt is outside the statute of limitations or that the creditor cannot prove the amount.
You can also request that the creditor prove their case by asking for discovery, which forces them to produce documents showing you owe the debt. Many creditors cannot do this, especially if they bought the debt from another company and do not have the original paperwork. If they cannot prove their case, the judge may dismiss the lawsuit.
If you cannot afford a lawyer, ask the court about legal aid services in your area. Some nonprofits also offer free or low-cost help with debt lawsuits. Do not assume you will lose just because you owe the money. Creditors must still follow the law and prove their case in court.
Settlement and payment plans as alternatives to judgment
If you are sued, you can still settle with the creditor before trial. Many creditors will accept a lump-sum payment of 40 to 70 percent of what you owe to avoid the cost and uncertainty of trial. You can also propose a payment plan—for example, paying $200 per month until the debt is satisfied. Any settlement should be put in writing and should specify that the creditor will not pursue further collection or report the account as unpaid once you have completed the agreement.
Settling before a judgment is entered is better than settling after, because a judgment stays on your credit report for seven years and can be renewed in some states. A settled account still damages your credit, but it shows that you resolved the matter rather than ignoring it.
If you cannot afford to settle or pay a plan, ask the creditor about hardship programs. Some card issuers offer reduced interest rates or temporary payment suspensions for customers facing financial hardship. These programs are not advertised widely, but they exist, and asking costs nothing.
Frequently Asked Questions
Can a credit card company sue me if I have not paid in two years?
Yes, if the statute of limitations in your state has not expired. Most states allow credit card companies to sue within three to six years of your last payment. Check your state's statute of limitations to know when you are no longer at risk of a lawsuit. Even after the deadline passes, the creditor can still report the debt and attempt to collect it.
What if the collection agency cannot prove I owe the debt?
If they cannot produce the original credit card agreement, statements, or a clear chain of ownership showing they bought the debt from the card issuer, you can ask the judge to dismiss the case. Many collection agencies file suit without complete documentation, and judges sometimes rule in favor of the defendant when proof is lacking.
Will settling a lawsuit remove it from my credit report?
Settling removes the threat of wage garnishment and bank freezes, but it does not erase the lawsuit or the debt from your credit report. A settled account still appears as delinquent. However, settling is better than losing a judgment, which allows the creditor to take collection action against your wages and accounts.
Can my wages be garnished if I lose a credit card lawsuit?
Yes, in most states. The amount varies by state—some protect a percentage of your wages, while others allow garnishment of up to 25 percent. Federal law sets a floor, but your state may be more generous to debtors. Check your state's garnishment laws to know how much of your paycheck is at risk.
What should I do if I receive a summons but cannot afford a lawyer?
Contact your local legal aid office or a nonprofit debt counselor. Many offer free help with debt lawsuits. You can also represent yourself by filing a written answer with the court within the deadline and requesting that the creditor prove their case. Responding on time is the most important step—ignoring the summons guarantees a default judgment against you.