How Long Before Credit Cards Sue for Unpaid Debts? Answered

To find out how long credit card companies wait before taking legal action, we contacted Mastercard, Visa, Discover, and American Express. These creditors wouldn’t provide specifics about their policies on litigation, but each state’s statute of limitations dictates how long a creditor has to sue you — if it is going to. In most states, the statue of limitations is between three and six years. That means, credit card companies have from the time of your first missed payment to your state’s statue of limitations to sue you for unpaid debts. For more details, see below.

How Long Before Credit Cards Sue?

Credit card companies and debt collection agencies can sue you for failure to repay your debts. If this happens and you receive a judgment against you, you will be forced to repay the debt and a judge can even garnish your wages to collect the amount owed.

We contacted the major U.S. credit card brands — Mastercard, Visa, Discover, and American Express — and asked how long creditors typically wait before taking legal action against a customer for failure to repay debts. Representatives from these major companies would not provide details of their policies on litigation.

We also reached out to top U.S. banks, including Bank of America, Chase, and Wells Fargo. Chase and Wells Fargo said they examine each delinquent account on a case-by-case basis. A Wells Fargo customer service representative added that the bank waits for an account to “charge off,” meaning the creditor has given up trying to collect on the debt, before pursuing any legal action.

While neither the credit card companies nor the banks were able to provide a 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 decides to do so. In most states, the statute of limitations is between three and six years, according to the Federal Trade Commission (FTC). 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.

Keep in mind, the statute of limitations typically starts when you first fail to make a payment. For example, if you live in Alabama, where the statute of limitations is three years, the creditor has three years from the date of your first missed payment to sue you. After three years, 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.

Based on this information, if a credit card company is going to sue you for failure to repay your debts, the company can do so any time after your first missed payment up to the state’s statute of limitations on debts. 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 Should You Do If You’re Sued by a Credit Card Company?

After a company files a complaint against you, you’ll receive a copy of the complaint, as well as a summons, which tells you why you are being sued. 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:

  • You can contact the credit card company and request a settlement. If the company agrees to a settlement, you’ll work out the terms directly with the company.
  • You can 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.
  • You can refuse to respond to the suit, or default. If you fail to respond, the judge will automatically rule against you and your wages will be garnished until the debt is paid.
  • You can 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, each state’s statute of limitations dictates how long a company has to sue you. In most states, the statue of limitations is between three and six years. Based on this information, if a credit card company is going to sue you for failure to repay your debts, the company can do so any time after your first missed payment up to the state’s statute of limitations on debts.

Have more questions about debt collection? See our article on who Penn Credit collects for and what to do if you’re contacted by Portfolio Recovery Associates.

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