Yes, credit card companies can sue you in Texas, and they do regularly

A credit card company can file a lawsuit against you in Texas if you stop paying your bill. The company does not need permission from the state or a court to start the process — they can hire a lawyer and file a claim in civil court on their own. If they win the case, the court issues a judgment, which gives them the legal right to collect the debt through wage garnishment, bank account levies, or a lien against your property.

Texas law does not prevent credit card companies from suing. What it does do is set limits on how long they can wait to sue and what they can collect afterward. Understanding these limits matters because they change what your options are and what you should do if you receive a lawsuit notice.

Key Takeaways

  • Credit card companies have four years from the date of your last payment to sue you in Texas, after which the debt becomes time-barred and they cannot win a lawsuit.
  • If a credit card company wins a judgment against you, they can garnish your wages, freeze your bank account, or place a lien on your home — but only after obtaining the judgment first.
  • Texas law protects a portion of your wages and certain bank account funds from garnishment, so not all of your income is at risk even after a judgment.
  • If you receive a lawsuit notice, you have a limited time to respond in writing to the court; ignoring it results in a default judgment against you.
  • The statute of limitations defense must be raised by you in your written response — the credit card company does not have to prove the debt is recent.

The four-year statute of limitations in Texas

Texas has a four-year statute of limitations on written contracts, which includes credit card agreements. This means a credit card company can sue you only within four years of your last payment or last charge on the account. Once four years have passed, the debt is time-barred, and if you raise this defense in court, the company cannot win.

The clock starts on the date of your last payment or last charge — whichever is later. If you made a payment in January 2020, the four-year window closes in January 2024. If you made a charge in March 2020 but never paid anything, the window closes in March 2024. After that date, the company can still contact you about the debt, but they cannot successfully sue you if you tell the court the statute of limitations has passed.

This is why credit card companies often file suit before the four-year mark. They know the important date is coming, and they want to get a judgment while they still can. If you have not heard from a credit card company in three years or more, the risk of a lawsuit drops significantly — but it does not disappear until the full four years have passed.

What happens if a credit card company wins a judgment

If the credit card company sues and wins — or if you do not respond to the lawsuit — the court issues a judgment in their favor. This judgment is a court order that says you owe the debt. It does not automatically take money from you. Instead, it gives the company the legal tools to collect.

With a judgment in hand, the credit card company can pursue several collection methods. They can garnish your wages, meaning money is taken directly from your paycheck before you receive it. They can freeze your bank account and take funds from it. They can also place a lien on your home, which means they have a claim against the property that must be paid if you sell it or refinance.

In Texas, however, not all of your income and assets are fair game. Your primary residence is protected under the homestead exemption, so the company cannot force a sale of your home to pay the debt. A portion of your wages is also protected — the company cannot garnish so much that you fall below minimum subsistence levels, though Texas law is generous to creditors on this point.

How credit card lawsuits work in Texas courts

When a credit card company sues, they file the case in a Texas district court or justice court, depending on the amount owed. The company must serve you with the lawsuit papers, which means a process server or sheriff's deputy delivers them to you in person, or they are left at your home, or they are sent by certified mail.

Once you receive the papers, you have a limited time to respond — typically 20 days if you were served in person, or 21 days if served by mail. Your response must be filed with the court in writing. If you do not respond by the important date, the court can enter a default judgment against you, meaning the company wins without ever proving their case.

If you do respond, the case proceeds to discovery, where both sides exchange documents and information. Many credit card cases settle before trial. If the case goes to trial, the credit card company must prove you owe the debt — they must show the contract, the charges, and the lack of payment. You can raise defenses at this stage, including the statute of limitations if the four-year window has closed.

Defenses you can raise in a credit card lawsuit

If you are sued, you have several possible defenses, though not all explore to every situation. The most straightforward is the statute of limitations: if more than four years have passed since your last payment or charge, you can tell the court the debt is time-barred and the company cannot win. This defense must be raised in your written response to the lawsuit — if you do not mention it, you lose the right to use it.

You can also challenge whether the company actually owns the debt. Credit card debt is often sold to other companies or assigned to collection agencies. If the company suing you is not the original creditor, they must prove they have the legal right to collect. Sometimes the paperwork trail is broken, and they cannot prove ownership.

You can dispute the amount owed if you believe the charges are wrong or if you made payments that were not credited to your account. You can also raise defenses related to how you were served with the lawsuit — if the papers never reached you properly, the court may dismiss the case.

What to do if you receive a lawsuit notice

Do not ignore a lawsuit notice. Ignoring it is the fastest way to lose. Instead, take these steps: First, read the papers carefully to understand what is being claimed and when you must respond. Second, note the response important date — missing it results in a default judgment. Third, consider whether you want to respond yourself or hire a lawyer.

If you cannot afford a lawyer, you can respond on your own. Your response should be filed with the court and a copy sent to the credit card company's lawyer. In your response, raise any defenses you have — especially the statute of limitations if it applies. You can also request a trial and ask the company to prove their case.

Some people try to settle with the credit card company after being sued. You can contact their lawyer and propose a payment plan or a lump-sum settlement. Many companies will negotiate rather than go to trial, especially if your defense is strong. Any settlement should be put in writing and should specify that the judgment will be dismissed or satisfied once you pay.

Wage garnishment and asset protection in Texas

After a judgment, the credit card company can garnish your wages. In Texas, the amount that can be garnished is limited by federal law, which allows up to 25 percent of your disposable income — the amount left after taxes and mandatory deductions. However, if 25 percent of your disposable income is less than 30 times the federal minimum wage per week, the company can only take the smaller amount.

Your primary residence is protected under Texas homestead law, so a judgment lien cannot force a sale of your home. However, the lien does attach to the property and must be paid if you sell or refinance. Bank accounts are not automatically protected, but Texas law does exempt certain funds, such as money in a trust account or funds designated for child support.

If you receive a garnishment notice from your employer, your employer is required by law to withhold the specified amount from your paycheck. You can challenge the garnishment by filing a motion with the court, but you must act quickly — usually within 10 days of receiving notice.

Frequently Asked Questions

How long does a credit card company have to sue me in Texas?

Four years from your last payment or last charge on the account, whichever is later. After four years, the debt is time-barred and they cannot win a lawsuit, but you must raise this defense in your written response to the lawsuit.

What should I do if I get served with a credit card lawsuit?

Read the papers, note the response important date, and file a written response with the court before the important date passes. Include any defenses you have, especially the statute of limitations if it applies. Do not ignore the lawsuit, as that results in a default judgment against you.

Can a credit card company take my house if they get a judgment?

No. Your primary residence is protected under Texas homestead law, so they cannot force a sale. However, they can place a lien on the property, which must be paid if you sell or refinance.

How much of my paycheck can they take after a judgment?

Up to 25 percent of your disposable income, or the amount above 30 times the federal minimum wage per week, whichever is less. Your employer is required to withhold this amount, but you can challenge the garnishment in court.

Can I settle with the credit card company after they sue me?

Yes. You can contact their lawyer and negotiate a settlement, payment plan, or lump-sum offer. Any settlement should be in writing and should specify that the judgment will be dismissed once you pay.