How Often Do Credit Card Companies Sue People for Money Owed?

Your credit card provider does not have to wait patiently for you to pay off your delinquent debt--- it can file a lawsuit against you as part of its collection efforts. A successful lawsuit gives the company the ability to take more aggressive action when collecting the debt---sometimes even directly seizing your property. Each credit card company's policies differ regarding debt collection lawsuits.

Debt Collection Lawsuits

There is no clear way to assess how often credit card companies as a whole sue debtors because, while some credit card providers sue frequently, others rarely seek legal recourse---preferring instead to charge off the debt, sell it to a collection agency and write off the balance as a tax loss. Although debt collection lawsuits are not uncommon, the majority of these suits come from third-party debt collectors rather than the credit card companies themselves.

Contributing Factors

Credit card companies take a variety of factors into consideration when determining whether or not to sue a consumer. Your creditor will likely pull a copy of your credit report and review your current debts, evidence of assets and any employment history available. This helps the credit card company determine if you are financially capable of paying your delinquent credit card balance after a lawsuit. The Neighborhood Economic Development Advocacy Project notes that the higher your debt, the greater the likelihood of a lawsuit.

Lawsuit Threats

A credit card company or collection agency collecting defaulted credit card debt must sue you within the statute of limitations allowed for debt collection lawsuits in your state. If the company does not do so, not only does it lose the right to sue, it also often loses the right to threaten you with a lawsuit.

Lawsuit threats are far more common that lawsuits themselves. Debt collectors know that consumers fear lawsuits and threatening to take legal action increases the odds that a debtor will make a payment. The Fair Debt Collection Practices Act, however, only permits creditors to make threats they can actually carry out. While the FDCPA only applies to third-party creditors, many states, such as California, have adopted the FDCPA as a statewide law applying to all creditors.

Lawsuit Consequences

You have the right to defend yourself in court should a credit card company sue you for a debt. If you lose the lawsuit, however, the credit card company gains the right to collect the debt from you involuntarily. Each state's laws differ regarding what individual rights creditors have following a lawsuit. In general, however, a creditor can garnish your wages, place liens against your property and seize your bank accounts.