Yes, credit card companies can sue you, and they do it regularly when you stop paying
A credit card company can file a lawsuit against you if you fall behind on payments, typically after 120 to 180 days of non-payment. If they win the lawsuit, they get a judgment — a court order that lets them collect the debt through wage garnishment, bank account freezes, or liens on property, depending on your state's laws. The lawsuit itself is not a threat or a bluff; it is a real legal action that results in a court date, and if you do not show up or respond, the company wins by default.
Whether a credit card company actually sues depends on the amount owed, how long you have not paid, and the company's collection practices. Some companies sue regularly; others sell the debt to a collection agency instead. Either way, you have legal rights and specific steps you can take to defend yourself.
Key Takeaways
- Credit card companies can sue after you miss payments for several months, and a judgment against you allows them to garnish wages or freeze bank accounts.
- You have the right to receive a summons and complaint before any lawsuit proceeds, and you can respond in writing or appear in court to dispute the debt.
- If you receive a summons, responding within the deadline (usually 20 to 30 days) is critical — ignoring it means the company wins automatically.
- Debt collection lawsuits often contain errors in documentation or proof, and you can challenge whether the company actually owns the debt or has the right to collect it.
- State laws vary significantly on how much of your wages can be garnished and which assets are protected from collection.
How credit card companies decide to sue
Credit card companies do not sue immediately after you miss a payment. Most wait until you are 120 to 180 days behind — roughly four to six months of non-payment. At that point, the account is usually written off as a loss on the company's books, and they decide whether to pursue collection through a lawsuit or sell the debt to a third-party collection agency.
The decision to sue depends on several factors: the amount owed (companies are more likely to sue for larger balances), your location (some states make collection easier than others), and the company's internal collection strategy. A $500 debt is unlikely to result in a lawsuit because the legal costs would exceed the recovery. A $5,000 or $10,000 debt is more likely to trigger a suit. Large credit card issuers like Capital One, Chase, and Discover sue regularly; smaller issuers or store cards may sell the debt instead.
If the company sells your debt to a collection agency, that agency can also sue you. The agency typically bought the debt for pennies on the dollar and may be more aggressive about pursuing legal action because their profit margin is higher.
What happens when you are sued
The lawsuit begins when the credit card company or collection agency files a complaint in civil court — usually small claims court if the amount is under $5,000 to $10,000 (the threshold varies by state), or district court for larger amounts. You will receive a summons and complaint, which are official court documents that tell you a lawsuit has been filed against you and when you must respond.
The summons will include a deadline — typically 20 to 30 days from the date you were served — by which you must file a written response with the court. This response is called an answer. You can admit the debt, deny it, or dispute specific parts of the claim. You can also raise defenses, such as that the statute of limitations has expired or that the company cannot prove it owns the debt.
If you do not respond by the deadline, the court will enter a default judgment against you. This means you lose automatically, without ever having your side heard. A default judgment is one of the most common outcomes in debt collection cases because many people do not realize they can respond or do not know how.
Your right to challenge the lawsuit
You have the right to dispute the debt in court, and many collection lawsuits contain errors that you can point out. Common problems include: the company cannot prove you owe the debt, the debt belongs to someone else (identity theft or a name mix-up), the account was already paid or settled, or the statute of limitations has expired.
The statute of limitations is a time limit on how old a debt can be before a company loses the right to sue. In most states, this is three to six years from the date of your last payment or last charge on the account. If the company sues after that deadline, you can file a motion to dismiss based on the statute of limitations. Some states are more generous to debtors; others give companies longer to sue.
You can also challenge whether the company actually owns the debt and has the legal right to collect it. If the debt was sold multiple times, the current owner must prove they have the right to sue. Many collection agencies cannot produce the original signed contract or a clear chain of ownership, and if they cannot prove their case, the court may dismiss the lawsuit.
To raise these defenses, you will need to file your answer with the court by the deadline. You can do this yourself (called pro se representation) or hire an attorney. Many legal aid organizations offer free or low-cost help with debt defense, and some attorneys work on contingency or for a flat fee in collection cases.
What a judgment means for your money and property
If the credit card company wins the lawsuit — either because you did not respond or because the court ruled in their favor — they receive a judgment. The judgment is not an immediate seizure of your assets; it is a legal tool that gives the company the right to collect through specific methods.
The most common collection method is wage garnishment, where the company obtains a court order requiring your employer to withhold a portion of your paycheck and send it to the creditor. The amount varies by state but is typically 10% to 25% of your disposable income. Some states protect a larger portion of wages; others allow more aggressive garnishment.
The company can also freeze your bank account through a bank levy, which allows them to take money directly from your account up to the amount of the judgment. They can place a lien on your home or car, which means they have a legal claim against that property and can force its sale to pay the debt. Again, state laws vary on which assets are protected — many states exempt a certain amount of home equity or a vehicle up to a certain value.
Some states are more debtor-friendly and protect more assets; others give creditors broader collection powers. Knowing your state's exemptions is important because it tells you what the company can and cannot take.
How to respond if you receive a summons
If you receive a summons and complaint, the first step is to read it carefully and note the deadline for your response. Do not ignore it. Missing the deadline is the single most costly mistake you can make in a debt collection case.
Next, gather any documents you have related to the debt: the original credit card agreement, statements, payment records, or correspondence with the company. These documents help you decide whether to admit, deny, or dispute the claim.
Write your answer and file it with the court before the deadline. Your answer should respond to each allegation in the complaint — you can admit what is true, deny what is false, and state that you do not have enough information to admit or deny. You should also list any defenses, such as the statute of limitations or a claim that the company cannot prove ownership of the debt.
If you cannot afford an attorney, contact your local legal aid organization or a law school clinic. Many offer free help with debt defense. Some areas also have court-based self-help centers that can guide you through the process.
After you file your answer, the case may proceed to discovery (where both sides exchange documents and information), settlement negotiations, or trial. Many cases settle before trial, especially if you raise a valid defense or the company realizes they cannot prove their case.
State laws that affect whether you can be sued
The rules around debt collection lawsuits vary significantly by state. Some states have shorter statutes of limitations, which means the company has less time to sue. Others have longer ones. Some states protect more of your wages or assets from garnishment; others do not.
A few states, such as North Carolina and South Carolina, have no wage garnishment for consumer debts, which means even if a company wins a judgment, they cannot take money from your paycheck. Other states allow garnishment of 25% or more of your disposable income. Some states exempt your primary residence from a lien; others do not.
Your state's rules also affect whether the company can sue in small claims court (which has lower filing fees and simpler procedures) or must use district court. Small claims court is often easier to navigate without an attorney, but the company still has the same collection powers after winning.
Look up your state's statute of limitations for credit card debt and its wage garnishment and asset exemption laws. This information is available through your state's court website or a legal aid organization.
Frequently Asked Questions
Can a credit card company sue me if I have not used the card in years?
Only if the statute of limitations has not expired. In most states, this is three to six years from your last payment or charge. If the company sues after that deadline, you can ask the court to dismiss the case. However, the company can still try to collect through other means, such as reporting the debt to credit bureaus.
What happens if I ignore the summons?
The court will enter a default judgment against you, meaning you lose without having a chance to defend yourself. The company can then garnish your wages or freeze your bank account. Responding to the summons, even if you owe the debt, is always better than ignoring it because it gives you a chance to negotiate or raise a defense.
Can the credit card company garnish my wages if I am unemployed?
No, wage garnishment requires income from an employer. If you are unemployed, the company cannot garnish wages. However, they can still pursue other collection methods, such as freezing a bank account or placing a lien on property you own.
Do I need a lawyer to respond to a debt collection lawsuit?
No, you can respond yourself, though an attorney can strengthen your case. If you cannot afford one, contact your local legal aid organization, which often provides free help with debt defense. Many court self-help centers also offer guidance on how to file your answer.
Can a collection agency sue me for a debt that is very old?
Only if the statute of limitations has not expired in your state. If it has, you can file a motion to dismiss. However, the age of the debt alone does not stop a company from trying to collect — you must raise the statute of limitations as a defense in court.