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When Will Credit Card Companies Sue
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Can A Credit Card Company Sue You?
It’s stressful when you have trouble paying your credit card bills. That debt can feel like it’s hanging over your head, and it can lead to more financial issues over time. If you’ve had an unpaid balance for a while, you might be wondering — can the credit card company sue you? This guide will answer that and cover what to do about expensive credit card debt.
It’s often easier to pay off credit card debt when you refinance. With a debt consolidation loan, you can secure a low interest rate and a fixed monthly payment amount. Check out the best consolidating loans to see if it’s an option for you.
Yes, the credit card company can sue you if you don’t pay your credit card bill. Although this is usually a last resort because of the time and money involved, it becomes more common when the account is unpaid.
Since credit card debt is unsecured debt, the lender needs a judgment to charge you. If it gets that judgment, you may have your bank account or wages garnished, and a lien on your property.
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Many credit card companies sell long-term accounts to debt collectors who are trying to recover debt. Debt collectors can also sue you if they bought your debt.
Having an overdue credit card can result in a lawsuit against you. However, this will not happen immediately. The credit card company’s actions depend on how long it has been since the last payment.
Up to 90 days: Your card issuer will notify you and likely charge you a late fee for each monthly payment you miss. When your account is overdue for 60 days, the card issuer can start charging you a higher interest rate, called a penalty APR. At this stage, your credit score may drop, but you can still make payments and keep your credit card account.
90 days to 180 days: A card issuer typically charges your account, which means it closes the credit card. It forwards the debt to its own internal debt collection service or sells the debt to a third-party buyer. The manufacturer may sue you at this time, although this is unlikely to happen yet.
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Past 180 days: At this stage, there is a high risk of being charged with credit card debt. This is the case if the debt is in the hands of the credit card company or a debt collection agency – either of them can file a lawsuit against you.
Even if your credit card bill is past due, you can usually avoid a lawsuit. If your credit card issuer is trying to collect on the debt, the best strategy is communication as you work to get out of credit card debt.
Call your credit card issuer at the number on the back of your card. Explain that you are in a difficult financial situation, and that you would like to learn what kind of payment assistance your card issuer can offer. Here are some common loan forgiveness options that may be available:
There’s a good chance you and your card issuer can work something out, such as a payment plan that you can afford. Remember: Credit card companies don’t want to sue cardholders. If you contact them and show that you are willing to pay even small payments, that can ensure that you don’t have to go to court.
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You may also be able to keep credit cards open with the card issuer, depending on the settlement you reach. If you settle the debt for less, your card issuer will almost certainly close your card. But if you pay off your loan in full, you may be able to keep your cards.
If you are sued for unpaid debt, you have been served with a complaint. You are required to respond to this complaint, unless you can come to an agreement with the plaintiff first and withdraw from the debt collection lawsuit.
The first thing to do after receiving a complaint is to check that it is valid. Here’s what to check:
It is highly recommended that you consult an attorney to assist you. Although this can be expensive, there are legal services across the country that offer free or low-cost legal services to those who need them. A lawyer can see if your debt is valid, and can negotiate a settlement or defend it in court.
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No matter how bad the situation is, try not to panic. You are not at risk of going to jail because of unpaid credit card debt. Most importantly, you have ways to resolve the situation, whether it’s a settlement, fighting a lawsuit, or filing for bankruptcy.
Lyle Daly is a personal finance writer specializing in credit cards, travel rewards programs, and banking. He writes for The Ascent and Motley Fool, and his work has appeared in USA Today and Yahoo! Finance. He was born in California but now lives as a digital nomad with a home base in Colombia.
Eric McWhinnie has been writing and editing digital content since 2010. He specializes in personal finance and investing. He also holds a bachelor’s degree in finance.
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Your credit card company will try to catch up with you if you fall behind on your payments. This is because creditors are allowed to follow all legally acceptable means to collect their money from creditors. A lawsuit is also an option, but it is often not the first legal measure that creditors choose.
You may default on your loan for one reason or another. Often, some people start to worry about being contacted or sued by the creditor without payment. But, in reality, creditors do not sue as often as many people think.
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This is because lawsuits can be costly, time-consuming, and frustrating. This article explains what happens if you fail to make your credit card payments on time and everything else you need to know about late credit card payments.
Lenders choose to sue based on the following factors: account balance, delinquency level, and estimated repayment potential (based on assets and employment income). So, your chances of being sued increase if you have an outstanding account balance, you have not made recent payments, and there is proof that you have assets and have a substantial income.
When you fall behind on your credit card payments, most lenders have policies in place to respond to missed payments. However, like any other business, credit card companies always try to have a good relationship with their customers, borrowers.
Therefore, litigation will not be the first preferred method of resolving insolvency. In most cases, the loan agreement will involve late payment penalties or increased interest as a result of late payments.
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Lending companies also weigh the costs and benefits of a lawsuit before going through with one. Keep in mind that credit bureaus make money from the interest they earn on loans. Therefore, even before the lender considers a lawsuit, they must first determine how much the lawsuit will cost and if it is really worth the trouble. This includes considering the amount of the debt, the possibility of recovery, and the legal costs that will be involved in the debt recovery process.
In short, the credit card company may sue you when the amount you owe exceeds court costs and after they have exhausted all of their debt collection efforts.
Example: Roger was sued by his credit card company, Synchrony, for a $5,400 debt in California. When Roger fell behind on his payments, Synchrony tried to contact him several times.
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