You may have unpaid debt and wonder when will a debt collector sue for that unpaid debt. From our experience, each creditor is different and each creditor has different criteria that the collector users to determine whether they will sue for unpaid debt. The purpose of this article is to provide
When will a debt collector sue?
A debt collector will sue for unpaid debt when it believes it has a good chance of collecting that debt. Some attributes may be whether there are assets that have positive equity such as property, the amount of the debt owed, state laws regarding garnishment, and the statutes of limitations.
- How many accounts am I past due on? The more accounts I owe the higher the chance one may sue me.
- How is my debt proportioned? Do I owe all my credit cards and loans to one bank or is it spread out?
- Is the creditor I owe most of my debt to local or small (credit unions)? Also, do they have more of a vested interest to sue me because they are a smaller bank (personal relationship)?
- How often do creditors I owe have access to my assets?
- Do I have checking, savings, or investment accounts with the creditors I owe? Can they see my transactions?
- Do I have equity in assets that banks can calculate based on what’s reporting to my credit report?
Will a collection agency sue for $5,000?
This is probably one of the most common questions we see is whether a collection agency will sue for just $5,000 or less. The answer is often that it depends on the collection agency. You will notice in our comprehensive reviews covering Midland Funding LLC and Portfolio Recovery Associates that you may be sued for as little as a couple of thousand dollars. I have also seen that a collection agency may not sue for much more than that amount.
How do you know if you will be sued for $5,000 or less?
It may be difficult to determine whether the collection agency you are working with will sue for $5,000 or less, but you may want to look at a few things to determine whether you may be sued. A company’s policies constantly changed, so this should be viewed as an estimate, but it may be helpful to consider.
- Does the company have a history of suing? You may be able to search on Google to find this information.
- Is the collection agency a law firm or just a collection agency?
- Is the collection agency a large or small collection agency? As Portfolio and Midland are some of the biggest collection agencies in the United States, you can understand that they have efficient operations that allow them to sue for less and still be profitable.
What are my options before being sued and after being sued?
First, you can try to settle the debt on your own. See how to settle credit card debt before going to court.
Second, you may compare your options if you have multiple debts that are outstanding or if you cannot afford the debt for or another reason. For example, oftentimes, a bankruptcy clears judgements. What should you do? It depends. There are 5 main options, so we build a debt relief comparison calculator below to help you do the following:
- Estimate the all-in costs for EACH option.
- Estimate the length of time for EACH option.
- Shows pros and cons for EACH Option.
- Uses your city and state for each of these estimates.
- Provides reputable providers in your area for different options.
Can I be sued while in a debt settlement program?
Yes, it is possible to be sued while in a debt settlement program. Certainly, when resolving your debt through a debt settlement program, there is always a risk your creditors can pursue collection through legal attorneys.
What happens if I am sued while in debt settlement?
Once an account goes to a legal attorney licensed to collect debt in your state, the first thing that will usually happen is you receive a pre-legal letter validating the debt owed. To clarify, this is the attorney advising you that the debt has been placed in their office and they could pursue a judgment. At that time you are not being sued, and the account can still be resolved for a portion of what’s owed. Depending on the aggressiveness of the attorney and a valid hardship, results can vary from reasonable settlement percentages (50%) all the way to paying 100% of the debt plus attorney’s fees. But, this is all before going to court or being served to appear in court.
If an attorney decides to move forward with pursuing a judgment the next thing you will receive are legal documents (Lit Docs) with a scheduled court date (you must be served these documents, review laws on being served in your state). If arrangements are not made with the attorney’s office before the scheduled court date, an individual may represent themselves or be represented and fight the account in court. Outcomes vary when accounts go in front of a judge. Based on experience, judges can be very lenient if you show up to court and give a valid reason why you can only pay a portion of the debt or make arrangements on the balance that fit your current budget. However, at any time before going to court you can try to make arrangements to resolve a balance.
You may consider reviewing all of your options in the case when you are sued via debt settlement by taking a Chapter 7 Means Test Calculator to estimate qualification or Chapter 13 Calculator to estimate your monthly payment plan. These calculators also allow you to compare all of the different relief options.
Debt settlement arrangements that are usually available are:
- Debt Settlement – Paying a portion of what’s owed in a lump sum or overpayments. We wrote an extensive article on debt settlement to provide you insights into how it works and the pros and cons of this solution.
- Stipulation Judgment Settlement – Pay a portion of what’s owed, but if the agreement is not met the attorney automatically retains judgment without having to go to court. Although, you lose the ability to fight the account in court.
- Payments towards the balance – Pay the full balance over time with payments that fit your budget and the attorney agrees with.
- Stipulation Judgment payments towards the balance – Pay the full balance over time with payments that fit your budget and the attorney agrees with. If the agreement is not met, the attorney automatically retains judgment without having to go to court. You lose the ability to fight the account in court.
What happens if a judgment has been granted against me?
There are four main ways that an attorney or debt collector can attempt to collect from your once they get a judgment against you:
- Wage garnishment of a paycheck
- Levy/garnishment of a bank account
- Lien on property or assets – Home mortgage
- Continue normal collection practices
However, you can still try to settle if a judgment has been retained but you haven’t been garnished or levied yet. Usually, there’s a grace period before an attorney will start executing judgment because they need to notify an employer or bank, and that can take time. In conclusion, certain states allow attorneys to use all of the above tactics, others may only allow one. Therefore, it’s important to review judgment laws in your state to know how an attorney can pursue collection once they have retained a judgment. You may be wondering the difference between a levy and a lien, which is important to understand,
Again, you can understand your debt relief options via the free debt relief options calculator below.
State by State Statute of Limitations
The Statute of Limitations is defined as the deadline for a lawsuit. Your creditor most likely knows these statutes and takes this into consideration when deciding when to sue for unpaid debt.
| State | Years | Statute |
|---|---|---|
| Alabama | 3 years | Title 6 Ch.2 Sec. 37 |
| Alaska | 3 years | 9.10.053 |
| Arizona | 6 years | HB 24121 |
| Arkansas | 5 years | 4-3-0118 |
| California | 4 years | Code of Civil Procedure S.337 |
| Colorado | 6 years | Colorado Revised Statutes Title 13 S.80-103.5 |
| Connecticut | 6 years | Chapter 926 Sec. 52-576 |
| Washington, D.C. | 3 years | 12-301 |
| Delaware | 3 years | Title 10, Sec. 8106 |
| Florida | 5 years | 95.11 |
| Georgia | 6 years | 9/3/2024 |
| Hawaii | 6 years | 657-1 |
| Idaho | 5 years | 5-216 |
| Illinois | 5 years | Code of Civil Procedure 5/13-205 |
| Indiana | 6 years | Title 34 Art.11, 2-9 |
| Iowa | 5 years | Ch. 614.1.4 |
| Kansas | 3 years | 60-512 |
| Kentucky | 5 or 15 years | 413.120 and 413.090 |
| Louisiana | 3 years | Civil Code Sec. 2 Art. 3494 |
| Maine | 6 years | 14-205-752 |
| Maryland | 3 years | Section 5-101 |
| Massachusetts | 6 years | General Laws Part III Title V Ch. 260-2 |
| Michigan | 6 years | Ch. 600.5807.8 |
| Minnesota | 6 years | Civil Procedure Ch.541.05 |
| Mississippi | 3 years | 15-1-29 |
| Missouri | 5 years | Ch. 516-120 |
| Montana | 8 years | 27-2-202 |
| Nebraska | 4 years | 25-206 |
| Nevada | 4 years | 11-190 |
| New Hampshire | 3 years | 382-A:3-118 (g) |
| New Jersey | 6 years | 2A:14-1 |
| New Mexico | 4 years | 37-1-4 |
| New York | 6 years | Civil Practice Law & Rules, 2-213 |
| North Carolina | 3 years | Civil Procedure 1-52.1 |
| North Dakota | 6 years | 28-01-16 |
| Ohio | 6 years | Courts – Common Pleas, Ch. 2305.07 |
| Oklahoma | 5 years | 12-95A(1) |
| Oregon | 6 years | Oregon Revised Statutes, Civil Procedure Ch. 12.080 |
| Pennsylvania | 4 years | Judicial Procedure 42 Pa. C.S. 5525(a) |
| Rhode Island | 10 years | 9/1/2013 |
| South Carolina | 3 years | Code of Laws Title 15 Ch. 3 Sec.530 |
| South Dakota | 6 years | 15-2-13 |
| Tennessee | 6 years | Title 28 3-109 |
| Texas | 4 years | Civil Practice and Remedies Code, S.16.004 |
| Utah | 6 years | 78B-2-30910 |
| Vermont | 6 years | 9A-3-118 |
| Virginia | 3 years | 8.01-246 |
| Washington | 6 years | Revised Code of Washington 4.16.040 |
| West Virginia | 10 years | 55-2-6 |
| Wisconsin | 6 years | 893.43 |
| Wyoming | 8 years | 1-3-0105 |
State Garnishments, Levies, and Vehicles
Three of the primary tools that collectors will use to try to reclaim debt is garnishment, levies, and vehicles. More information can be found below broken out by the state.
| State | Wages | Vehicle | Bank Account |
|---|---|---|---|
| Alabama | 75% | None | $3,000 |
| Alaska | $456-7161 | $3,900 | $1,820 or $2,860 |
| Arizona | 75% | $5,000 | $150 |
| Arkansas | 75% | $1,200 | $800 or $1250 |
| California | 75% | $5,000 (2x) | $0 |
| Colorado | 75% | $5,000 | None |
| Connecticut | 75% | $1,500 | $1,000 |
| Delaware | 85% | None | $500 |
| D.C. | 75% | $2,575 | $850 |
| Florida | 100% | $1,000 | None |
| Georgia | 75% | $3,500 (2x) | $600 |
| Hawaii | 80% | $2,575 | None |
| Idaho | 75% | $5,000 | $800 |
| Illinois | 85% | $1,200 | $2,000 |
| Indiana | 75% | None | $4,000 |
| Iowa | 75% | $5,000 | $100 |
| Kansas | 75% | $20,000 | None |
| Kentucky | 75% | $2,500 | $1,000 |
| Louisiana | 75% | None | None |
| Maine | 75% | $5,000 | $400 |
| Maryland | 75% | $5,000 | $6,000 |
| Massachusetts | 75% | $700 | $425 |
| Michigan | 75% | $3,250 | None |
| Minnesota | 75% | $3,600 | None |
| Mississippi | 75% | $10,000 | None |
| Missouri | 75% | $1,000 | $1,250 |
| Montana | 75% | $2,500 | None |
| Nebraska | 85% | $2,500 wildcard | $2,500 wildcard |
| Nevada | 75% | $4,500 | None |
| New Hampshire | 75% | $4,000 | $8,000 |
| New Jersey | 90% | $1,000 | $1,000 |
| New Mexico | 75% | $4,000 | $2,000 |
| New York | 90% | $4,000 | $25,008 |
| North Carolina | 100% | $1,500 | $500 |
| North Dakota | 75% | $1,200 | $7,500 |
| Ohio | 75% | $3,225 | $425 (2x) |
| Oklahoma | 75% | $3,000 | None |
| Oregon | 75% | $1,700 (2x) | $400 |
| Pennsylvania | 100% | None | $300 |
| Rhode Island | 75% | $12,000 | None |
| South Carolina | 100% | $5,000 | $5,000 |
| South Dakota | 75% | $6,000 | 6k-Auto |
| Tennessee | 75% | $4,000 wildcard | $4,000 wildcard |
| Texas | 100% | Unlimited | None |
| Utah | 75% | $2,500 or $3,500 | None |
| Vermont | 75% | $2,500 | $1,100 |
| Virginia | 75% | $2,000 | None |
| Washington | 75% | $2,500 | $500 |
| West Virginia | 75% | $2,400 | $800+ |
| Wisconsin | 75% | $1,200+ | $1,000 |
| Wyoming | 75% | $2,400 | None |
What to do when the debt is paid in full an they are still garnishing your wages.
Hey Michelle, I am sorry to hear about this situation. Do you have a letter or anything showing that the debt is paid in full?