How Long Does It Take for a Credit Card Company to Sue After My First Missed Payment?
Introduction
When it comes to missed payments on credit card debt, the process can vary significantly. Understanding how long it might take for a credit card company to sue can help you better manage your financial situation and take proactive steps to avoid legal action.
Debt Considered Past Due
In many areas, debt is considered past due after 90 days. When this happens, the loan is classified as "non-performing." Unless the debtor makes a payment arrangement, the creditor may take further action.
Default and Charges Off
After about six months, if the account remains unpaid and in default, the creditor will update the status as "charged off." This means the creditor no longer reports the defaulted account as an asset. However, this does not mean the debt is no longer owed.
Debt Buyer Involvement
Once an account is charged off, the original creditor may keep it in-house or sell it to a debt buyer, such as LVNV Funding. Debt buyers commonly attempt to collect by contacting the debtor via mail or phone calls. If no payment arrangements are made within a few months, the debt buyer may decide to pursue legal action.
Third-Party Debt Collectors
Alternatively, the original creditor may decide to hire a third-party debt collector to handle collection efforts. These collectors will attempt to collect by sending letters and making phone calls to the debtor. If no arrangements are made for payment within a few months, the original creditor may decide to sue the debtor.
Statute of Limitations
It is important to note that the statute of limitations varies by state. Once this period has expired, creditors are legally prohibited from taking any legal action to collect on the account. However, the amount of time for a statute of limitations can vary from state to state, making it crucial for consumers to research and understand the specific laws in their state of residence.
Conclusion
There is no one-size-fits-all answer as to how long it might take for a credit card company to sue after a missed payment. Depending on the creditor's policies and actions, it could be within months or several years. Understanding the statute of limitations and taking proactive steps can help mitigate the risk of legal action. It is recommended to consult with a consumer attorney to get specific information on your rights and obligations in your state.