Yes, credit card companies can sue you, and they do it regularly
A credit card company can take you to court if you stop paying your bill. They do not need your permission, and they do not have to warn you first — though most send collection notices before filing a lawsuit. If they win, the court can order your wages garnished, your bank account frozen, or a lien placed on your property, depending on your state's laws.
The lawsuit itself is a civil case, not a criminal one. You will not go to jail for owing credit card debt. But a judgment against you creates a legal claim on your income and assets that can last for years.
Key Takeaways
- Credit card companies can sue you directly or sell your debt to a collection agency that then sues on their behalf.
- Most lawsuits happen after you miss payments for several months, not after a single missed payment.
- If you are sued, you have the right to respond in court and challenge the company's claim, even if you do owe the money.
- A judgment allows the creditor to garnish wages, freeze bank accounts, or place liens on property, but the rules vary by state.
- The debt itself has a time limit called the statute of limitations — after that period, a creditor cannot sue you, though the debt may still appear on your credit report.
When a credit card company is likely to sue
Credit card companies do not sue over a single missed payment. Most wait until you are 90 to 180 days behind — roughly three to six months of no payment. At that point, the account is usually charged off, meaning the company writes it off as a loss on their books.
After charge-off, the company may sue you directly, or they may sell the debt to a third-party collection agency. If sold, the collection agency becomes the owner of the debt and can sue in their own name. Either way, the lawsuit follows the same process: the creditor files a complaint in court, you receive notice, and you have a important date to respond.
Some credit card companies have internal collection departments and sue frequently. Others sell debt when ready. The decision often depends on the size of the debt and the company's collection strategy.
What happens if you are sued
When a credit card company or collection agency sues, you will receive a summons and complaint. The summons tells you the court date and your important date to respond — usually 20 to 30 days, depending on your state. The complaint states how much you owe and why.
You have three main options: you can ignore it, you can respond and defend yourself, or you can try to settle before the hearing. Ignoring it is the worst choice. If you do not show up or respond, the court will likely enter a default judgment against you, meaning the creditor wins automatically without proving anything.
If you respond, you can challenge whether the debt is yours, whether the amount is correct, or whether the company has the legal right to collect it. You can also raise defenses based on your state's laws — for example, that the debt is too old to sue on, or that the company failed to follow proper procedures.
The statute of limitations on credit card debt
Every state has a statute of limitations — a time limit on how long a creditor can sue you for a debt. For credit card debt, this period ranges from three to ten years depending on your state. Once that time passes, the creditor cannot file a lawsuit, even if you still owe the money.
The clock usually starts when you make your last payment or last charge on the card. Missing a payment does not reset the clock. If you have not paid in five years and your state's limit is four years, the debt is too old to sue on.
This does not erase the debt from your credit report, and the creditor can still contact you about it. But they cannot take you to court. If they do sue anyway, you can raise the statute of limitations as a defense, and the case should be dismissed.
What a judgment means for your wages and bank account
If the court rules in the creditor's favor, they receive a judgment. This is a court order saying you owe the money. The judgment itself does not automatically take money from your paycheck or bank account — the creditor has to take additional steps to collect.
With a judgment, the creditor can ask the court to issue a wage garnishment, which orders your employer to send a portion of your paycheck directly to the creditor. They can also ask for a bank levy, which freezes your bank account and allows them to withdraw money up to the judgment amount. In some states, they can place a lien on your home or car, giving them a claim on the property if you sell it.
The amount they can take varies by state. Some states protect a portion of your wages or bank account from garnishment. Federal law protects 75 percent of your disposable income from wage garnishment, but state law may be more protective. Check your state's rules to understand what is shielded.
How to respond if you receive a lawsuit notice
If you receive a summons and complaint, read the important date carefully and mark it on a calendar. Missing the response important date is costly — it leads to a default judgment with no chance to defend yourself.
Your response is called an answer. You can file it yourself or hire a lawyer. In your answer, you admit or deny each claim in the complaint. You can also raise defenses — for example, that the statute of limitations has passed, that you already paid the debt, or that the creditor cannot prove you owe it.
If you cannot afford a lawyer, some legal aid organizations offer free help with debt lawsuits. You can also contact your state bar association for a referral to low-cost legal services. Even a brief consultation can help you understand your options and what to say in court.
If you want to settle before trial, you can contact the creditor or collection agency and offer a payment plan or lump-sum settlement. Many will negotiate rather than go to trial. Get any settlement agreement in writing before you pay.
How a judgment affects your credit and finances
A judgment appears on your credit report and damages your credit score. It can make it harder to borrow money, rent an apartment, or get a job — some employers check credit reports during hiring.
The judgment stays on your credit report for seven years from the date it is entered. After seven years, it should be removed, though the underlying debt may still appear. The judgment itself also has a lifespan — in most states, it lasts 10 to 20 years, and the creditor can renew it before it expires.
Even after the judgment expires, the creditor can still try to collect through wage garnishment or bank levy in most states. The expiration of the judgment does not erase the debt; it just means they cannot sue again on the same judgment.
Frequently Asked Questions
Can a credit card company sue me if I dispute the charge?
If you have filed a formal dispute with the credit card company, they typically cannot sue while the dispute is being investigated. However, if the dispute is resolved against you, they can proceed with collection and lawsuit. Disputing a charge is different from refusing to pay — it means you are challenging whether the charge is valid.
What if the collection agency cannot prove I owe the debt?
If the collection agency sues but cannot provide proof that you owe the debt — such as a signed agreement or account statements — you can win the case by raising this defense in court. Many older debts lack proper documentation, which is why responding to the lawsuit and challenging their evidence matters.
Can they sue me after I have paid part of the debt?
Yes. Paying part of a debt does not prevent a lawsuit for the remaining balance. However, a partial payment may restart the statute of limitations clock in some states, giving the creditor more time to sue. Before making a partial payment, understand your state's rules or consult a lawyer.
What happens if I ignore the lawsuit?
If you ignore the summons and do not respond by the important date, the court will enter a default judgment against you. This means you lose automatically, and the creditor can then garnish your wages, freeze your bank account, or place a lien on your property without proving anything in court.
Can I have the judgment removed after it is entered?
In some cases, yes. You can file a motion to vacate the judgment if you have a good reason — for example, if you did not receive proper notice or if you have new evidence. The rules vary by state and court. A lawyer can help you determine whether you have grounds to challenge the judgment.