Yes, credit card companies can and do sue for unpaid balances, but only after specific steps and within legal time limits

A credit card company can file a lawsuit against you in civil court if you stop paying your bill. They do not need permission from a government agency — they can decide on their own to sue. However, they cannot sue when ready. Most credit card companies wait several months of non-payment before filing, and they must follow state laws about how they notify you and how much time must pass before they go to court.

If a credit card company wins a lawsuit against you, the court issues a judgment. That judgment gives the company the legal right to collect the debt through methods like wage garnishment (taking money directly from your paycheck) or a bank levy (freezing and taking money from your bank account). The judgment itself does not automatically happen — the company has to win the case first.

The risk of being sued increases the longer you do not pay. Most credit card companies will not sue over small balances because the cost of filing and going to court is not worth it. But balances of $1,500 or more make a lawsuit more likely, especially if you have been behind for six months or longer.

Key Takeaways

  • Credit card companies can sue you in civil court without government permission, but they must wait until you are significantly behind — usually at least 120 to 180 days of non-payment.
  • You will receive a court summons before the lawsuit proceeds, and you have the right to respond to the summons and defend yourself in court.
  • If the company wins the judgment, they can pursue collection methods like wage garnishment or bank levies, but only through additional court orders.
  • The lawsuit must happen in the correct court for your location, and the company must prove you actually owe the debt — they cannot straightforward claim you do.
  • State laws set limits on how long a company can sue you for credit card debt, ranging from three to ten years depending on where you live.

How long before a credit card company sues

Credit card companies typically wait 120 to 180 days (four to six months) of non-payment before filing a lawsuit. This is not a legal requirement — it is a business decision. During those months, the company sends collection letters, calls you, and may sell your debt to a third-party debt collector. If you still do not pay, the company or collector decides whether suing is worth the cost.

The longer you are behind, the more likely a lawsuit becomes. After six months of non-payment, the risk rises significantly. After a year, many accounts are already in court or have been sold to a debt buyer who specializes in lawsuits. Some companies are more aggressive than others — large issuers like Capital One and Discover have sued accounts within four to five months of default, while smaller issuers or those focused on settlement may wait longer.

The balance amount matters. A $500 debt is rarely worth suing over because court costs and attorney fees can exceed what the company would recover. A $5,000 debt makes a lawsuit economically sensible. This is why smaller balances are more likely to be sold to a debt collector or written off than taken to court.

What happens when you receive a court summons

A court summons is an official document that tells you a lawsuit has been filed and you have a important date to respond. You will receive it by mail, by a process server who delivers it in person, or sometimes by certified mail. The summons includes the name of the court, the case number, the amount being sued for, and a important date — usually 20 to 30 days — to file a written response.

Ignoring a summons is a serious mistake. If you do not respond by the important date, the court can issue a default judgment against you without hearing your side. A default judgment means the company wins automatically, and the court can then order wage garnishment or bank levies. You lose your right to defend yourself once a default judgment is entered, though you may be able to ask the court to set it aside if you have a valid reason for missing the important date.

When you receive a summons, you should respond even if you believe you do not owe the debt or believe the amount is wrong. Your response does not have to be complicated — it can be as straightforward as a letter stating that you dispute the debt or that you need more time to gather information. The goal is to tell the court you are contesting the case so the company cannot win by default.

What the credit card company has to prove in court

The credit card company cannot straightforward tell the judge you owe money and win. They must present evidence that proves you opened an account with them, that you agreed to their terms, that you made charges or took a cash advance, and that you stopped paying. This evidence usually includes a copy of your signed credit card agreement, statements showing charges and payments, and records showing when payments stopped.

In practice, many credit card companies have difficulty producing the original signed agreement, especially for older accounts. If the company cannot prove you authorized the account, the judge may dismiss the case. However, if the company can show statements in your name, charges you made, and a payment history, the judge will likely find that you opened the account even without the original signature.

If the debt has been sold to a third-party debt buyer, that buyer must prove they own the debt — meaning they must show they purchased it from the original credit card company. Debt buyers sometimes cannot produce this chain of ownership, which is a valid defense. If you receive a summons from a debt buyer, ask them to prove they own the debt before you agree to anything.

Statute of limitations: how long a company can sue

Every state has a statute of limitations that sets a time limit on how long a credit card company can sue you. This limit ranges from three years in some states to ten years in others, and it depends on the state where you live and where the credit card account was opened. Once the statute of limitations expires, the company can no longer file a lawsuit, though the debt itself does not disappear.

The clock starts when you last made a payment or last acknowledged the debt in writing. If you make a payment or send a letter admitting you owe the money, the clock may restart in some states, giving the company more time to sue. This is why it is important to be careful about what you say to a debt collector — a written admission can extend the time they have to sue you.

If a company sues you after the statute of limitations has expired, you can raise this as a defense in court. The judge will dismiss the case if the time limit has passed. However, you must bring this defense up — the company will not tell the judge on its own. If you receive a summons and the debt is very old (more than five or six years), check your state's statute of limitations and consider whether it may have expired.

Wage garnishment and bank levies after a judgment

If the credit card company wins the lawsuit and receives a judgment, they can use that judgment to collect money directly from your paycheck or bank account. Wage garnishment means the court orders your employer to send a portion of your paycheck to the credit card company. Bank levy means the court freezes your bank account and transfers money to the company.

The company cannot garnish your wages or levy your bank account without a separate court order — the judgment alone does not give them that power. They must file additional paperwork with the court asking for garnishment or levy, and in some states they must give you notice before they do so. Once the court approves it, your employer or bank is legally required to comply.

Federal law limits how much can be garnished from your paycheck. The company can take no more than 25 percent of your disposable income (the money left after taxes and mandatory deductions), or the amount by which your weekly income exceeds 30 times the federal minimum wage, whichever is less. Some states set lower limits. Certain income like Social Security and disability benefits cannot be garnished in most cases, though there are exceptions for child support and taxes.

Options if you are sued or facing a lawsuit

If you receive a summons, your first step is to respond to the court by the important date. You do not need a lawyer to respond, though having one helps. Your response should state that you dispute the debt, that you need time to gather information, or that you believe the amount is incorrect. This keeps the case from being decided against you by default.

After you respond, you may be able to negotiate a settlement with the credit card company or debt collector. Many companies would rather settle for a portion of what you owe than go through a full trial. If you can offer a lump sum or a payment plan, the company may agree to drop the lawsuit. Get any settlement agreement in writing before you pay anything.

If you cannot afford to pay and do not have a defense, you may want to consult with a bankruptcy attorney. Bankruptcy can stop a lawsuit and may eliminate the debt entirely, though it has serious long-term consequences for your credit. Many bankruptcy attorneys offer free initial consultations, so you can learn whether bankruptcy makes sense for your situation without cost.

If you believe the debt is not yours or that the company cannot prove you owe it, you should show up in court or have a lawyer represent you. Bring any documents you have — old statements, payment records, or evidence that you paid the debt. If the company cannot prove their case, the judge will dismiss it.

How to avoid being sued

The best way to avoid a lawsuit is to contact the credit card company or debt collector as soon as you realize you cannot pay. Many companies have hardship programs or will negotiate a payment plan before they file suit. Explain your situation honestly — job loss, medical emergency, or other hardship — and ask what options are available.

If you cannot pay the full amount, offer what you can. Even small payments show the company you are trying to resolve the debt, which makes them less likely to sue. A payment plan or settlement agreement stops the clock on a potential lawsuit and gives you time to get back on your feet.

If a debt collector contacts you, you have the right to request that they stop contacting you. Send a written request by certified mail saying you do not authorize further contact. However, stopping contact does not stop the company from suing — it only stops the phone calls and letters. If you want to avoid a lawsuit, you still need to address the debt itself.

Frequently Asked Questions

What should I do if I receive a court summons?

Respond to the court by the important date listed on the summons — usually 20 to 30 days. Your response can be a straightforward letter stating you dispute the debt or need time to gather information. Do not ignore the summons, as the company can win by default and the court can then order wage garnishment or bank levies.

Can a credit card company sue me if I have not paid in two years?

Yes, but only if your state's statute of limitations has not expired. Most states allow lawsuits within three to six years of the last payment. Check your state's specific time limit. If the statute has expired, you can use that as a defense in court, but you must raise it yourself — the company will not.

Can they garnish my Social Security or disability benefits?

Federal law protects most Social Security and disability benefits from garnishment by credit card companies. However, if you receive both protected benefits and other income in the same bank account, the company may be able to freeze the account. Keep protected benefits in a separate account if possible, and tell the court about protected income if garnishment is ordered.

What if the debt collector cannot prove they own the debt?

If the debt has been sold and the collector cannot show they purchased it from the original credit card company, you can raise this as a defense in court. Ask the collector to produce the contract showing they own the debt. If they cannot, the judge may dismiss the case.

Can I settle the debt after I have been sued?

Yes. Even after a lawsuit is filed, you can negotiate a settlement with the credit card company or debt collector. Many companies prefer to settle rather than go to trial. Get any settlement agreement in writing, and make sure it states the lawsuit will be dismissed once you pay.