Most companies don't take legal action until an account has been past-due for six months or more. Whether or not you get sued depends on the amount of debt you have, too. Generally speaking, you're less likely to be sued if you owe less than $2,000 and more likely to be sued if you owe more than $2,000.
While agencies typically pursue the full amount owed, debt buyers may accept reduced payments. The decision to sue often depends on the debt's size (usually a minimum of $1,000), age, and original agreements. Debt collection practices for unpaid credit card balances frequently lead to court cases.
About 13.5% of the time, according to the Consumer Financial Protection Bureau. ² A lawsuit is a last resort for credit card companies, but they can and sometimes will take you to court.
Collection lawsuits are less likely to be issued for debts under $1,000. In cases where a debtor is making small payments, even if those payments are below the minimum requirement of the creditor, the creditor will not file a lawsuit.
You Lose: If the credit card or debt collection company wins, it will ask the judge for authority to collect its money. Your wages could be garnished. Liens could be placed on your property or forced into a sale.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
In general, a credit card company can sue you for non-payment once your account becomes severely delinquent, typically after 90 to 180 days of missed payments.
In general, most debt will fall off your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.
Typically, debt collectors will only pursue legal action when the amount owed is in excess of $5,000, but they can sue for less.
Under the Fair Credit Reporting Act (FCRA), most negative information, including unpaid credit card debt, must be removed from your credit report after seven years. This seven-year period typically begins 180 days after the account first becomes delinquent.
If you have credit card debt that the creditor claims you did not pay, you may be facing issues with debt collectors or even a lawsuit. The steps below give an overview of the typical steps involved in credit card debt lawsuits.
Creditors File a Lawsuit
The clock starts when you miss your first payment. It can be reset by contact with the debt collection agency, with rules varying by state. A lawsuit can result in a lien against your property, wage garnishment and more. However, you can't be sentenced to jail for not paying a debt.
Banks and credit card companies use advanced tracking and monitoring systems to detect and analyze unauthorized transactions, and they can often trace the origin of fraudulent activity by examining transaction patterns, merchant locations, and digital footprints.
If you get sued for credit card debt, you'll receive a summons and complaint. These official documents let you know what you're being sued for, who is suing you, and how much time you have to file a response to the lawsuit. In legal terms, your response is called an answer.
Here's the good news — you can't go to jail for credit card debt, and if a debt collector implies that you might end up in jail, they are breaking the law as established by the Fair Debt Collection Practices Act.
If you continue not to pay, you'll hurt your credit score and you risk losing your property or having your wages or bank account garnished.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the: Type of debt. State where you live.
According to the American Association for Debt Resolution, the average settlement amount is 50.7% of the balance owed. So yes, if you owed a dollar, you'd get out of debt for fifty cents. But the average amount of debt enrolled is $4,500. That means you should still expect to pay a hefty sum to get out of debt.
According to the Consumer Financial Protection Bureau (CFPB), credit card companies sue their customers about 12% of the time. On average, credit card companies sue to recover balances over $2,700—this isn't a set amount, but an average. Credit card companies can and do sue on debts both larger and smaller than $2,700.
Specifically, the rule states that a debt collector cannot: Make more than seven calls within a seven-day period to a consumer regarding a specific debt. Call a consumer within seven days after having a telephone conversation about that debt.
A debt trap means the inability to repay credit amount. It is a situation where the debtor could not be able to repay the credit amount.