Can A Company Sue You For Unpaid Credit Card Debt?

We’ve all heard the story by now: the vast majority of Americans cannot afford an even minor unexpected expense. We’re living paycheck to paycheck. Sometimes, we have to use our plastic to pay for goods and services even when we’d rather use cash. Credit card companies have taken advantage of this formula for decades, sprinkling interest on top of already massive bills. But what happens when you can’t pay back your credit card debt.

Yes, your credit card company can sue you.

The truth is, though, that they’d rather not. Going to the trouble of suing someone for debt they can’t afford is often more trouble than it’s worth. But if a credit card company investigates your circumstances and finds that you might be able to pay off your credit card debt — but for some reason won’t — then it will likely propose litigation against you to recoup their own investments. That’s just the way business works. 

One thing to keep in mind if you’re worried that your credit card company might initiate a lawsuit is that they can’t do it right away. There’s no reason to sweat bullets the first time you default on a payment. There might be reason to worry, however, if you go months and months without being able to afford the bill. The shortest timetable for a company usually falls around six months. 

It is extremely important to take any notification of a lawsuit seriously. You might be summoned to court. If you ignore a court summons, then in the best case scenario a default judgment will be awarded to the credit card company suing you. In the worst case scenario, a bench warrant could be put out for your arrest. Never ignore the problem. 

Also, keep in mind that there are people out there who go to the trouble of purchasing your debt from the credit card company owed — meaning they pay at least some portion of the debt owed — and then set out to sue you to recoup the money they paid (and then some, of course).

Before you take any further action, request a verification of debt owed. The Fair Debt Collection Practices Act allows you to make this formal request in writing, at which point a debt collector must furnish you with proof that the debt is owed. This is more important when the debt has been purchased by a third-party.

Next, decide how to address what you owe. A settlement is probably in your best interest if you cannot afford the debt, because it will allow you to mitigate costs. But keep in mind you will still owe any settlement costs remaining, and failing to pay could land you in hotter water. Settling debt will likely leave you with a much reduced credit score that could last for years.

And that means the best option is simply paying off the debt in full. Sit down with a lawyer to ask about debt management plans and additional options.