Yes, credit card companies can sue you, and they do it regularly
A credit card issuer or the debt collection company that bought your account can file a lawsuit against you in civil court to recover what you owe. If they win, the court issues a judgment, which gives them the legal right to pursue collection methods like wage garnishment or bank account levies. This is not a threat or a scare tactic — it is a standard legal process that happens thousands of times per month across the United States.
Whether a company actually sues depends on the size of the debt, how long you have not paid, and whether they think they can collect. A $300 debt is unlikely to trigger a lawsuit because the cost of filing and pursuing the case exceeds what they would recover. A $5,000 debt is a different calculation. The older the debt, the less likely a lawsuit becomes, partly because of statutes of limitations — time limits after which a creditor loses the legal right to sue.
Understanding when and how you can be sued, what your rights are during the process, and what happens if a judgment is entered against you is the difference between a manageable debt problem and one that affects your paycheck or bank account for years.
Key Takeaways
- Credit card companies and debt buyers can sue you in civil court, and a judgment against you allows them to garnish wages or levy bank accounts.
- The statute of limitations for credit card debt varies by state, typically between three and six years, and the clock resets if you make a payment or acknowledge the debt in writing.
- You have the right to respond to a lawsuit, present a defense, and request proof that the debt is actually yours before a judgment is entered.
- A judgment does not automatically lead to wage garnishment — the creditor must file a separate order with your employer, and some income is protected by law.
- If you receive a lawsuit notice, responding within the important date is critical; ignoring it almost always results in a default judgment against you.
How credit card lawsuits actually start
The process begins when your account goes unpaid for a period set by the card issuer — usually 120 to 180 days. At that point, the company may send the debt to an internal collections department, sell it to a third-party debt buyer, or refer it to a collection law firm. Any of these entities can file a lawsuit.
The lawsuit is filed in civil court, typically in the county where you live or where the card issuer is based, depending on the contract terms and state law. You will receive a summons and complaint, either by mail, in person, or by a process server. The summons tells you the important date to respond — usually 20 to 30 days, depending on your state. The complaint lays out the claim: you borrowed money, you agreed to repay it, you did not, and here is what we are owed.
Many people never see these documents because they move, ignore mail, or the process server cannot locate them. That does not stop the lawsuit. If you do not respond by the important date, the court enters a default judgment against you, meaning the creditor wins without ever proving their case in front of a judge.
Statutes of limitations: the time window for being sued
Every state has a statute of limitations for credit card debt — a important date after which a creditor loses the legal right to sue. This period typically ranges from three to six years, but the exact length depends on your state and sometimes on whether the debt is written or oral. In some states it is three years; in others, four, five, or six. A few states have longer periods for certain types of debt.
The clock starts when you miss a payment, not when you open the account. However, the clock can reset. If you make a payment on an old debt, even a small one, you may restart the statute of limitations in your state. If you acknowledge the debt in writing — for example, by responding to a collection letter and admitting you owe it — the clock may also reset. This is why debt collectors sometimes push you to make a small payment or get you to admit the debt is yours: it extends their window to sue.
If a creditor sues you after the statute of limitations has expired, you can raise that as a defense in court. The creditor cannot win. However, you must actually raise the defense; if you do not respond to the lawsuit at all, you lose the right to use it.
What happens if you are sued and do not respond
Ignoring a lawsuit is the most expensive mistake you can make. If the important date to respond passes and you have not filed an answer or other response with the court, the creditor can ask the judge to enter a default judgment. The judge almost always grants it, because you have not contested the claim.
A default judgment is a court order stating that you owe the debt. It is enforceable when ready. The creditor can then use it to garnish your wages, freeze and empty your bank account, place a lien on your home, or pursue other collection methods allowed by your state. A judgment also appears on your credit report and can affect your ability to borrow, rent, or get hired for certain jobs.
Even if you believe the debt is not yours, or that the amount is wrong, or that the company has no right to sue, you must respond to the lawsuit to preserve your rights. Responding does not mean you have to pay; it means you are telling the court your side of the story.
How to respond to a credit card lawsuit
When you receive a summons and complaint, read the important date carefully — it is usually printed on the first page. You must file a response with the court before that date. The response is called an answer in most states. You can file it yourself or hire an attorney.
In your answer, you admit or deny each claim in the complaint. You can also raise defenses — legal reasons why the creditor should not win even if the facts are true. Common defenses include: the statute of limitations has expired, the creditor cannot prove you owe the debt, the amount is wrong, the debt was discharged in bankruptcy, or the creditor lacks standing to sue (meaning they do not own the debt and have no right to collect it).
You can also request that the creditor provide proof of the debt — documents showing the original account agreement, statements, and a clear chain of ownership if the debt was sold. Many debt buyers cannot produce this documentation, and if they cannot prove the debt is yours, you can win the case.
Filing an answer costs nothing except your time if you do it yourself, or attorney fees if you hire a lawyer. Many legal aid organizations offer free or low-cost help with debt lawsuits if your income is below a certain threshold.
Wage garnishment and bank account levies after judgment
Once a judgment is entered, the creditor has the legal right to collect, but they still must take additional steps to actually reach your wages or bank account. They cannot straightforward take money on their own; they must file a separate order with your employer (for wage garnishment) or your bank (for a levy).
For wage garnishment, the creditor files a garnishment order with your employer. Your employer is then required by law to withhold a portion of your paycheck and send it to the creditor. The amount varies by state but is typically 10 to 25 percent of your disposable income — the amount left after taxes and certain deductions. Some income is protected: Social Security, disability benefits, unemployment benefits, and child support are generally off-limits.
For a bank account levy, the creditor files an order with your bank. The bank freezes the account and sends the available funds to the creditor. However, certain funds in the account may be protected, such as Social Security deposits or funds below a state-set threshold.
Garnishment and levies continue until the judgment is paid off or until the judgment expires. Judgments typically last 10 to 20 years, depending on your state, and can often be renewed.
Defenses you can raise in court
You have legal rights in a debt lawsuit, even if you owe the money. The most common defenses are:
- Statute of limitations expired: If the debt is older than your state's time limit, you can ask the court to dismiss the case. You must raise this defense in your answer.
- Lack of proof: The creditor must prove you owe the debt. If they cannot produce the original account agreement, statements, or a valid chain of ownership, you can win.
- Mistaken identity or wrong amount: If the debt belongs to someone else or the amount is incorrect, you can dispute it in court.
- Debt was discharged in bankruptcy: If you filed bankruptcy and the debt was included, the creditor cannot sue you for it.
- Violation of the Fair Debt Collection Practices Act: If a debt collector broke the law while collecting (for example, by calling before 8 a.m. or after 9 p.m., or by harassing you), you may have a counterclaim.
Raising a defense does not mean you will win, but it gives you a chance to present your side in court. Many cases settle before trial if the creditor realizes they cannot prove their case.
What to do if you receive a lawsuit notice
The moment you receive a summons and complaint, take these steps:
- Read the entire document and find the response important date — it is usually 20 to 30 days from the date you received it.
- Write down the important date on a calendar or set a phone reminder. Missing it is the single biggest mistake.
- Contact a legal aid organization in your state if you cannot afford an attorney. Many offer free help with debt lawsuits.
- Gather any documents you have related to the debt: the original account agreement, statements, payment records, or correspondence with the creditor.
- File your answer with the court before the important date. Include any defenses you have and a request for proof of the debt.
- Keep a copy of everything you file and bring it with you if the case goes to court.
Do not ignore the notice, do not assume the debt is too old to sue on, and do not wait to see what happens. Acting within the important date is the difference between preserving your rights and losing the case by default.
Frequently Asked Questions
Can a credit card company sue me if I am on a payment plan?
If you have a written agreement with the card issuer or collector to make payments, they typically will not sue as long as you stick to the plan. However, if you miss a payment on the plan, they can resume collection efforts, including a lawsuit. Get any payment plan in writing and keep records of every payment you make.
What is the difference between a judgment and a debt?
A debt is what you owe. A judgment is a court order stating that you owe it and giving the creditor the legal right to collect through garnishment, levies, or other methods. You can owe a debt without a judgment, but once a judgment is entered, the creditor has much more power to collect.
Can I settle a lawsuit after it is filed?
Yes. Even after a lawsuit is filed, you can negotiate a settlement with the creditor or their attorney. Many cases settle before trial. If you reach an agreement, ask the creditor to file a dismissal with the court so the case is closed and no judgment is entered against you.
Does filing for bankruptcy stop a credit card lawsuit?
Filing for bankruptcy triggers an automatic stay, which halts most lawsuits when ready. However, bankruptcy is a major financial decision with long-term consequences. Speak with a bankruptcy attorney or legal aid organization before filing to understand whether it is the right option for your situation.
What happens if I move to a different state after being sued?
Moving does not stop a lawsuit. The court can still enter a judgment against you, and the creditor can enforce it in your new state. If you move, make sure the court and the creditor know your new address so you receive notice of any hearings or judgments.