How Long Before Credit Cards Sue for Unpaid Debts? Answered

Short Answer: Most major creditors in the U.S. will not pursue legal action against a delinquent account until it has been charged off as a loss, which happens after six months of missed payments. If a creditor plans to sue you, each state’s statute of limitations dictates how long they have to do so — usually between three and six years. For more details, see below.

How Long Before Credit Cards Sue?

The IRS allows 180 days, or about six months, for customers to pay off their overdue balances or work out a payment arrangement with the creditor. After 180 days, the account will be charged off; typically, credit card issuers will wait until after the account is charged off to sue you for unpaid debts.

According to Discover’s credit resource center, a card can be revoked after four to five months of missed payments. It is unlikely (but not impossible) that the creditor will take any legal action during the first few months of missed payments.

We contacted the major U.S. credit card brands and banks and asked how long creditors typically wait before taking legal action against a customer for failure to repay debts. Representatives from these companies would not provide specifics details about their litigation policies. However, we found that you should receive written notice before the company takes any legal action against you. A Wells Fargo customer service representative added that the bank waits for an account to “charge off,” meaning the creditor recategorizes the debt as a loss, before pursuing any legal action.

Representatives for the following companies could not provide detailed information about when credit card companies sue for unpaid debts but said that issuers examine each delinquent account on a case-by-case basis:

  • American Express
  • Bank of America
  • Chase
  • Discover
  • Mastercard
  • Visa
  • Wells Fargo

Consequences of Failing to Repay Debts

If a credit card company or debt collection agency sues you for failure to repay, you will receive a judgment against you and must repay the debt. A judge can garnish your wages to collect the amount owed. You will also likely be responsible for court fees, but so will the creditors. If your debt is smaller than the fees for a collection attorney — especially if the creditor is a large corporation — it is unlikely that the creditor will go to the trouble of taking you to court.

Statute of Limitations for Debt Collection

While neither the credit card companies nor the banks were able to provide a definite time frame during which you can expect to be sued if you fail to pay your debts, the laws in your state will dictate how long a creditor has to sue you for nonpayment — if it decides to do so at all. In most states, the statute of limitations is between three and six years from the first missed payment. A few states allow up to 10 years. To find out your state’s laws regarding debts and the statute of limitations, contact your state attorney general’s office.

The creditor retains the legal right to take legal action against you any time between your first missed payment and the end of the statute of limitations. After the statute of limitations is up, the creditor can no longer sue you, but you still owe the debt — and the creditor can still try other means to collect the amount due, according to the FTC. If you are concerned about unpaid credit card debts, you may want to contact the creditor to discuss your financial situation. You may be able to work out a payment plan or settlement before the company decides to turn to litigation.

What to Do If Sued by a Credit Card Company

After a company files a complaint against you, you’ll receive a copy of the complaint. You’ll also receive a summons, which tells you the reason for your suit. You’ll have approximately 30 days to respond.

If you know you owe the debt, there are a number of ways you can respond to the lawsuit:

  • Request a settlement. Contact the credit card company, acknowledge the amount you owe, and request a settlement. If the company agrees to a settlement, you’ll work out the terms directly with the company.
  • Contest the complaint. This usually involves attending a hearing in court, and you may want to hire an attorney — particularly if you owe a substantial amount to the credit card company. At the hearing, you’ll provide any documentation you have to prove that the amount you’re being sued for is incorrect or that you don’t owe the debt.
  • Refuse to respond to the suit. This is also known as a default. If you fail to respond, the judge will automatically rule against you and garnish your wages until the debt is paid off.
  • Declare bankruptcy. If you know you can’t pay the debt, you may need to file for bankruptcy. To find out more about filing for bankruptcy, check out the FTC’s page on filing for bankruptcy.

If you believe the suit has been filed in error and that you do not owe the debt specified, the best thing to do is contact a lawyer. You’ll also want to contact the credit card company to request a verification of the debt; you must do this in writing, and it’s a good idea to send your request via certified mail. If the company fails to produce documentation, you have the right to ask that the lawsuit be dismissed. However, if the company does provide documents verifying the debt is yours, you may be required to repay the amount.

In Summary

None of the major credit card companies we contacted were willing to provide specifics about their litigation processes. However, creditors will likely wait until the account is charged off — which takes around six months — before taking legal action, and you should receive written notice before this happens. Each state’s statute of limitations dictates how long a company has to sue you; in most states, the statute of limitations is between three and six years.