Can You Be Sued for Not Paying a Credit Card Bill?
Credit card companies, like all other creditors, have the right to sue you for money you owe yet failed to pay. A winning lawsuit gives the credit card company the right to secure payment by force -- usually via bank account or wage garnishment proceedings. Your state laws determine the rights credit card companies and collection agencies have when suing you for unpaid credit card bills.
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Debt Collection Rights
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The contract you signed when you accepted the credit card contained a provision giving the company the right to collect from you any debt you accrue on your credit card. In the event you card provider chooses not to file suit, it can sell the account to another company -- often a collection agency -- that will file a lawsuit against you.
Amount Owed
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The amount you owe to your provider plays a role in whether the company or any subsequent debt collectors that purchase the account will file a lawsuit for payment. Not all creditors sue consumers for unpaid credit card debts. The more you owe, the greater your chances of receiving a court summons. Although each company has its own policies that govern when to file suit against debtors, credit card companies and debt collection agencies are most likely to sue you if you owe more than $1,000.
This does not mean that just because you owe less than $1,000 on your credit card you are safe from a lawsuit. The Fair Debt Collection Practices Act notes that creditors can continue to charge interest on any unpaid balance even after selling the account. Thus, even a small credit card debt will continue to grow until you pay it off.
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Time Frame
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Your state limits how long creditors can take legal action against you via a statute of limitations. The statute of limitations for debt enforcement does not bar the creditor from collecting the debt, but does prohibit the company from filing suit against you after a certain period of time. This enforcement statute varies by state, and making a payment to either the credit card company or collection agency "renews" the statute of limitations and gives your creditor additional time in which to sue you.
Default Status
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Your failure to pay a single credit card bill will not result in a lawsuit. When you miss a payment, you will face a late fee and, depending on how late your payment arrives, the company can also report your late payment to the credit reporting agencies -- leaving a delinquent mark on your credit report.
Lawsuits become a possibility when the company no longer has any hope of collecting a voluntary payment from you. This typically occurs after 180 days, when the company deems the account unprofitable and charges it off as a loss. The credit card company still owns the defaulted account and still has the right to collect on it. If you do not submit payment voluntarily once your account falls into default, the company may file a lawsuit to recover the debt.
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References
- Lawyers.com; Creditors' Legal Rights; William Fischer; 2010
- Neighborhood Economic Development Advocacy Project; Debt Collection Basics; 2007
- Federal Trade Commission: The Fair Debt Collection Practices Act
- MSN Money; Is There a Statute of Limitations on Debt?; Liz Pulliam Weston; 2011
- Bankrate.com; Getting Rid of An Old Charge-Off; Steve Bucci; 2009
