How Long Does it Take for a Creditor to Take You to Court?

When you owe a debt to a creditor, one of the actions that it could take to collect the debt is to file a lawsuit against you. Once a lawsuit is filed, you will have to appear in court and risk receiving a judgment against you. Understanding how much time you have before this occurs can help you determine your best options to handle the debt.

Account Charge-Off

When you have a debt with a creditor, you will not be sued until the creditor charges off your account. A charge-off is a process by which the creditor removes your account from its books and writes off the account as bad debt. The creditor typically will not do this until somewhere between six and eight months have passed. When the account is charged-off, it will appear as a negative item on your credit report.

Verifying the Debt

After charging off the account, the creditor will most likely turn your account over to a collections agency. A collections agency will contact you and try to collect the debt. Once the collections agency contacts you, you can request a verification of the debt. The collector then has 30 days to provide verification of the amount you owe. From that point, you have 30 days to pay the debt or set up a payment plan. After that, the creditor may file a lawsuit against you.

Will Creditor Sue?

Even if you owe money to a creditor for an extended period of time, you may not be sued. Creditors evaluate each account differently to determine whether they will file a lawsuit. If the amount is relatively small and the creditor does not want to pursue it, you may never have a lawsuit filed against you. Companies know that they will incur legal fees along the way and it may not be worth it to them to file.

Statute of Limitations

When it comes to collecting a debt, creditors must abide by the statute of limitations laws. Each state has a statute of limitations on debt. If the debt has been in effect for longer than the statute of limitations, the creditor can no longer collect it. Statutes of limitations very from as short as three years to as long as 15 years.