- A credit card issuer's main objective is to collect the money you owe. However, it must balance its collection efforts with the likelihood of success. It does not want to spend too much time and time pursuing debts that will probably never be repaid because the account holder has no job or assets and doesn't appear likely to be financially solvent in the near future. Instead it focuses its efforts on people who may pay if enough pressure is applied or who can be legally forced to do so.
- Justin Harelick, a Bankrate financial columnist, explains that time frame plays a role in the decision to sue. A credit card company will not sue account holders who are only a month or two behind in their payments. After 60 days the company often turns the account over to the internal collections department. The next step may be a lawsuit if that does not generate any payments.
- Credit card companies will generally assess your financial situation before deciding to sue. Harelik states that they look at factors like whether you are currently working, the length of time you've held your current job, and whether you own a home or other assets. A stable job means the company may be able to garnish your paycheck if it gets a court judgment against you, and it may be able to put a lien on your house or certain other personal property. It is more likely to sue if it believes it can attach your wages or property because that boosts the chances of collecting the money you owe. This makes it worth the company's time and legal expenses.
- Harelik recommends avoiding a lawsuit by making at least the minimum payment due on your credit card account, even if you must struggle to do so. This minimizes the length of the delinquency. He explains that taking on a part-time job temporarily may help you ward off a lawsuit by giving you enough extra funds to pay on the card until your financial situation stabilizes.
Dana Dratch of creditcards.com advises trying to negotiate a lower payment, waiver of late payment fees or other terms with the credit card company if you absolutely cannot make the minimum payment. The company may be willing to do this rather than go through a court case. - You are not safe from a lawsuit if a credit card company charges off your account rather than suing you. If it sells the account to a collection agency, it can choose to sue you as long as the debt still falls within your state's statute of limitations. The agency may add fees that can boost the original amount substantially, and it may be able to get a garnishment or lien against you in certain states.