How Often Do Credit Card Companies Sue for Non-Payment? (2024)

Hannah Locklear | April 11, 2024

Fact-checked by George Simons, JD/MBA

Summary: On average, credit card companies sue for non-payment in 1 out of 7 cases, or about 14.5% of the time. If you’re being sued for credit card debt, use SoloSuit to respond and win in court.

Your credit card company will try to reach you if you fall behind with your payments. This is because creditors are allowed to pursue all means legally acceptable to collect their money from debtors. A lawsuit is also an option, but it is not usually the first legal measure creditors opt for.

You may fail to pay your credit for one reason or another. Often, some people begin to worry about being contacted or sued by a creditor for non-payment. But, quite frankly, creditors do not sue as often as many people think.

This is because lawsuits can be costly, time-consuming, and frustrating. This article explains what happens if you fail to pay your credit cards on time and everything else you need to know about late credit card payments.

Avoid being sued by sending a Debt Validation Letter.

When will a credit company sue you for non-payment?

A credit company usually sues for non-payment after 180 days have passed without the consumer paying and the account is officialy charged off.

Creditors choose to sue based on the following factors: account balance, level of delinquency, and estimated likelihood of payment (based on assets and employment income). So, your chances of being sued increase if you have an account balance, you recently defaulted on your payments, and there is proof that you own assets and have a substantial income.

When you fall behind on your credit card payments, most creditors have policies in place to respond to the missed payments. However, just like any other business, credit card companies always try to maintain a good relationship with their customers, the debtors.

Therefore, a lawsuit wouldn't be the first desirable means of resolving a non-payment. In most cases, the credit agreement would involve a late-fee penalty or an increased interest rate as a consequence of late payment.

The credit companies also weigh the costs and benefits of a lawsuit before filing one. Keep in mind that the credit agencies make money from the interests they earn from the debts. Therefore, even before creditors consider a lawsuit, they first must determine how much it would cost to sue and if it's actually worth the trouble. This includes considering the amount of debt, probability of recovering it, and legal expenses they would incur in the debt recovery process.

Before making such decisions, the creditors may opt for the following methods of debt recovery:

• Penalties for non-payment or late payments.
• Increased interest rates.
• Notifications for payment.
• Credit card cancellation.
• Lowered credit card limits.
• Loss of other benefits attached to timely payments.

In summary, a credit card company will probably sue you when the amount you owe is higher than potential court costs and after they’ve exhausted all their other debt collection efforts.

Let's take a look at an example.

Example: Roger is being sued by his credit card company, Synchrony, for a debt of $5,400 in California. When Roger fell behind on his payments, Synchrony tried contacting him about it multiple times. Initially, the company charged Roger fees and interest which made on-time payments even more challenging for him. After a few months without contact from Roger, Synchrony sued him because the amount of debt in question was high enough to make the efforts worth it. In order to stand a fighting chance, Roger used SoloSuit to file an Answer in court and worked with Synchrony to come up with a settlement payment plan.

How long before credit card companies sue for debt?

After all collection efforts have been exhausted, credit card lawsuits are generally initiated after 180 days since the first missed payment.

In other words, credit card companies will usually wait until around six months of non-payment have passed before suing.

Chances are that the credit card company will sell the debt account to a debt collection agency after writing the account off as a loss. When a debt is sent to collections, your credit score will take a major hit. Debt collectors will usually reach out several times before filing a lawsuit, but it depends on the agency involved.

Keep debt collectors from harassing you by responding with SoloSuit.

What are the odds of being sued by a credit card company?

Most consumers have about a 14.5% chance of being sued by a credit card company, as detail in a report by the Consumer Financial Protection Bureau.

When credit card companies take people to court over debt, the amount owed is between $2,700 and $12,300, according to the same report. This means that, on average, creditors only go to court if someone owes them more than $2,700

What if my debt is transferred to a debt collection agency?

Sometimes, credit card companies’ attempts to reach out to a debtor may not bear any positive result. Most credit card companies hand over the debt to collection agencies who are more persistent and experienced in debt collection when this happens.

Debt collection agencies make their profits from the commissions they earn after a successful debt collection. They may not be as lenient as the credit card companies, but their collection practices are regulated by the Fair Debt Collection Practices Act (FDCPA).

Such agencies will regularly contact you through phone calls, collection letters and may even want to discuss a repayment plan with you. But, again, if these methods fail, a lawsuit would be the next option.

Since debt collectors are known to purchase old debt for a fraction of the original debt amount, they are more likely to reach a debt settlement. SoloSettle makes it easy to start the process by using a tech-based approach to send and resceive settlement offers until an agreement is reached. To learn more about settling your debt with debt collectors, check out this video:

Credit card debt collection lawsuit explained

If you’re being sued for credit card debt, the lawsuit can have several possible outcomes.

For example, if you use the statute of limitations of the credit card debt in your defense, the case may be ruled in your favor. If you fail to appear for a hearing, the court will automatically pass a default judgment in favor of the credit collector. On the other hand, the creditor gains nothing by suing a debtor who is judgment proof.

This section discusses these outcomes in more detail.

Statute of limitations

You may use the statute of limitations as your defense in court. The statute of limitation is the time limit that the companies have to sue you for the debt, which differs in different states and the type of debt. After the SOL expires, the debt becomes time-barred, meaning the collection agency can no longer file a lawsuit against you for the debt.

However, in some states, the clock on the debt can restart once the debtor accepts, in writing, that they owe the debt. In that case, the collector can still sue for the debt. Some state laws also make it illegal for a debt collector to continue contacting you for a time-barred debt, while others allow it.

Use the statute of limitations as your defense.

Debtor is judgment proof

If a debtor does not have enough assets, money, or garnishable income, they are considered judgment proof. This means that the creditors will not be able to collect anything from the debtor. Despite that, the debt collector can still file a lawsuit against the debtor.

Default judgment

A default judgment is passed when the debtor fails to appear in court for the hearing. Unfortunately, some people often assume that they have no chance against a debt collector when a lawsuit is filed against them, and therefore choose to ignore the court summons.

The truth is, you will never know what defenses you had in your favor or whether the debt you are being pursued for is yours if you ignore the summons. For that reason, SoloSuit can help you file your Answer for a credit card lawsuit, increasing your chances of winning such a case.

Respond immediately if you are getting sued by credit card companies

The most important thing to know about credit card lawsuits is that you can increase your chances of winning exponentially if you just respond with a written Answer.

Ignoring a lawsuit is never a good idea, because if you don’t respond within the deadline, you will lose by default. This gives the creditor or debt collector the right to garnish your wages and put liens on your property.

Increase your chances of winning your debt collection lawsuit by 7x with SoloSuit.

Check out this video to learn more about how to respond to a debt collection lawsuit:

What are my chances of winning a credit card debt lawsuit?

According to our internal data, your chances of winning a credit card debt lawsuit increase by 7x when you use SoloSuit to respond to the lawsuit. This is because most credit card debt lawsuits end in a default judgment when the consumer fails to respond in time.

The simple act of filing an Answer into the case blocks a default judgment and improves your chances of winning dramatically, especially if you’re dealing with a debt buyer like LVNV Funding or Midland Credit Management.

How often do collection agencies sue?

The short answer is very often.

The CFPB has reported that 15% of American consumers reported being sued by a debt collector, and debt collection cases make up the majority of civil cases filed in most US states, averaging at about 40%. And we predict that debt collection lawsuits will continue to increase as US consumers return to pre-pandemic spending.

Luckily, you can increase your chances of winning a debt lawsuit simply by responding, and SoloSuit can help you draft and file an Answer into your case.

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide