Your account enters default, your credit score drops, and the card issuer can sue you — but the timeline and your options depend on how long you've been unpaid

When you stop paying a credit card, the issuer doesn't immediately close your account or report you to a debt collector. Instead, a sequence of events unfolds over weeks and months. Your interest rate may jump, late fees accumulate, your credit report gets damaged, and eventually the card issuer either sues you directly or sells your debt to a collection agency. You have legal rights at each stage, and understanding them matters because creditors often make mistakes — and because some options only exist if you act before a certain point.

Key Takeaways

  • Your account enters default after 30 days of missed payment, and the issuer reports this to credit bureaus, which immediately lowers your credit score.
  • After 180 days of non-payment, the issuer typically charges off the account and may sell the debt to a collection agency, though you still legally owe it.
  • Credit card companies can sue you in civil court to recover the debt, and if they win, they can garnish your wages or freeze your bank account depending on your state's laws.
  • Statute of limitations laws limit how long a creditor can sue you — typically three to six years depending on your state and the type of debt.
  • You can request debt validation from a collection agency, negotiate a settlement, or set up a payment plan at almost any point in the process.

What happens in the first 30 days

Missing one payment triggers late fees immediately — usually $25 to $40 on the first missed payment, and another fee 30 days later if you still haven't paid. Your interest rate stays the same for now, but the issuer begins calling and sending letters. None of this appears on your credit report yet.

After 30 days past due, the account is reported to the three major credit bureaus — Equifax, Experian, and TransUnion. This is called a "30-day late" and it damages your credit score. The exact damage depends on your score before the late payment; someone with excellent credit loses more points than someone already struggling. A 30-day late typically costs 90 to 110 points.

The 60-to-180-day window: when your rate jumps and debt collection begins

At 60 days past due, your interest rate can jump to the card's default rate, which is often 29.99% or higher. This means interest compounds faster on the unpaid balance. The issuer continues calling and may hire a third-party collection agency to contact you on their behalf, though they still own the debt at this stage.

At 120 days past due, the damage to your credit report deepens. A 60-day late costs another 50 to 100 points. A 90-day late costs another 50 to 100 points. By this point, your credit score has usually fallen 150 to 300 points depending on where you started.

At 180 days (six months) past due, the issuer typically "charges off" the account. This means they write it off as a loss on their books and report it to credit bureaus as a charge-off. This is not forgiveness — you still legally owe the debt. The charge-off remains on your credit report for seven years from the date of first delinquency (the date you first missed a payment, not the charge-off date).

When the debt is sold to a collection agency

After charge-off, the issuer usually sells the debt to a debt buyer or collection agency for pennies on the dollar — sometimes 5 to 10 cents per dollar owed. The collection agency now owns the debt and has the legal right to collect it. They will contact you by phone, mail, and sometimes email.

When a collection agency first contacts you, you have 30 days to request debt validation under the Fair Debt Collection Practices Act (FDCPA). This means you can ask them to prove they own the debt, that the amount is correct, and that they have the legal right to collect it. If they cannot provide this proof, they must stop collection efforts. Many agencies fail to validate properly, which can be grounds to dispute the debt on your credit report.

A collection account on your credit report damages your score, though typically less than an active late payment. The collection account also stays for seven years from the date of first delinquency with the original creditor — not seven years from when the collection agency bought it.

When a credit card company or collector can sue you

A credit card issuer or collection agency can file a civil lawsuit to recover the debt. They do not need your permission and do not need to warn you first, though they must serve you with legal papers. If you are sued, you will receive a summons and complaint, usually delivered by a process server or certified mail.

You have a limited time to respond — usually 20 to 30 days depending on your state. If you do not respond, the court enters a default judgment against you, which means you lose automatically. With a judgment, the creditor can garnish your wages (take money directly from your paycheck), freeze your bank account, or place a lien on your property, depending on your state's laws.

However, creditors can only sue within the statute of limitations. This varies by state and by type of debt, but for credit card debt it is typically three to six years from the date of last payment or last charge. Once the statute of limitations expires, the debt is no longer legally collectible through a lawsuit, though the creditor can still contact you and the debt remains on your credit report.

Your options at different stages

If you can pay within the first 30 days, you can stop the late fees and credit damage from worsening. Paying after 30 days but before charge-off still stops additional late fees and prevents the charge-off, though the late payments already reported stay on your credit report.

If you cannot pay in full, you can negotiate a settlement with the issuer or collection agency. Many will accept 40 to 60 cents on the dollar to close the account. Get any settlement offer in writing before you pay, and specify whether they will remove the account from your credit report or report it as "settled" (which is better than "unpaid").

You can also set up a payment plan. The issuer or collector may agree to accept smaller monthly payments over time. Again, get this in writing and confirm whether late fees will continue to accrue.

If you are sued, you can respond to the lawsuit and contest it. You can argue that the creditor failed to prove the debt, that the amount is wrong, or that the statute of limitations has expired. You can also request a payment plan as part of a settlement with the court.

How state laws affect what creditors can do

Your state's laws determine how much a creditor can garnish from your wages and whether they can freeze your bank account. Some states protect a portion of your wages from garnishment; others allow creditors to take up to 25% of your disposable income. Some states exempt certain bank accounts (like those receiving Social Security) from freezing.

Your state's statute of limitations also determines how long a creditor can sue you. In some states it is three years; in others it is six. Once that period expires, the creditor cannot sue, though they can still contact you and the debt remains on your credit report.

If you are considering bankruptcy, the rules vary by state as well. Chapter 7 bankruptcy can eliminate credit card debt entirely, while Chapter 13 creates a repayment plan. Bankruptcy stops lawsuits and wage garnishment immediately through an automatic stay, though it damages your credit for seven to ten years.

Frequently Asked Questions

Will my credit card company sue me if I stop paying?

They may, but not immediately. Most issuers wait until the account is charged off (around 180 days) or sold to a collection agency before filing suit. Whether they actually sue depends on the amount owed and your state's laws. Smaller balances are less likely to be sued on because the legal costs outweigh recovery. Larger balances are more likely to result in a lawsuit.

What's the difference between a charge-off and a collection account?

A charge-off is when the original creditor writes off the debt as a loss on their books and reports it to credit bureaus. A collection account is when a third party (a collection agency or debt buyer) now owns the debt and is trying to collect it. Both damage your credit, and both can result in a lawsuit. You still legally owe the debt in both cases.

Can I be sued after the statute of limitations expires?

No. Once the statute of limitations expires (typically three to six years depending on your state), the creditor cannot sue you. However, they can still contact you and attempt to collect, and the debt remains on your credit report for seven years from the date of first delinquency. If you are sued after the statute expires, you can raise this as a defense in court.

What happens if I ignore a lawsuit?

If you do not respond to a lawsuit within the required time (usually 20 to 30 days), the court enters a default judgment against you. The creditor can then garnish your wages, freeze your bank account, or place a lien on your property depending on your state's laws. Responding to the lawsuit is critical, even if you cannot afford to pay the full amount.

Can I negotiate with a collection agency?

Yes. Collection agencies often accept settlements for less than the full amount owed because they bought the debt for a fraction of its face value. You can offer a lump sum or a payment plan. Always get any settlement offer in writing before you pay, and ask whether they will remove the account from your credit report or report it as settled.