When a person takes out a credit card account, he is taking out a line of credit with a finance company. In all cases, the debtor will be required to sign a contract outlining the terms under which the contract is taken out and how the debt is required to be repaid. If the debtor fails to abide by these terms and the debt becomes delinquent, the company may choose to sue the debtor for the amount owed.
Credit Cards
Credit cards allow an individual to draw against a line of credit to pay for purchases. When an individual pays for a purchase with his card, he is essentially taking out a loan with the card. Like all loans, this loan drawn from the line of credit constitutes a legally binding agreement between the borrower and the lender. If the borrower fails to pay back the loan, the lender may sue for breach of contract.
Delinquent Debt
A debt that is not paid back on time will generally not incur a lawsuit immediately. In general, credit card companies will first assess penalties against the debtors, such as fees and increases in interest payments. It is only after the debt has become severely delinquent -- exactly what constitutes severe delinquency will vary by company -- that the company may consider filing suit against the debt in a civil court.
Civil Suits
Lawsuits stemming from unpaid debts are usually filed on the basis of a breach of contract. The credit card company will generally sue the individual for failing to abide by the terms of contract that specified how and when the debt was to be repaid. When and if the credit company will bring a suit against the debtor will depend on the company's policies. However, any breach of the contract can trigger a lawsuit.
Considerations
Technically, a credit card company can bring a lawsuit for any amount of money that the debtor legally owes but is delinquent in paying. However, realistically, a credit card company will only file a suit in situations in which it finds it financially beneficial to do so. Exactly how much it will cost a company to file a suit will vary, meaning that the exact amount of debt that will trigger a suit will vary by company, as well.
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