That is almost an impossible question to answer as a default and charge-off can be handled in a number of different ways by the credit card companies. Furthermore, they may not sue you at all - I have several clients who have defaulted on thousands of dollars worth of credit card debt and while it damaged their credit scores and they had to put up with a barrage of threatening letters and phone calls, they were never actually sued.
More often than not,
the credit card company will end up selling the right to collect on your debt to a collection agency (for pennies on the dollar or close to it). After buying your debt, the collection agency will make a number of attempts to collect (through threatening letters and phone calls) before referring it to their legal department for possible legal action against you. A good number of the legal departments (these are often not actually in-house legal departments but private law firms who are retained by collection agencies) will send you more threatening letters on their letterhead indicating they have been hired to take legal action against you if the debt is not paid and they will always claim that this is your last chance to avoid having a lawsuit filed against you (some will go so far as to claim you will be dragged into court kicking and screaming by law enforcement if you do not pay - never believe anything included in this type of letter as the extent of law enforcement involvement on the front-end of a civil lawsuit is a sheriff`s deputy may show up and had you a copy of the lawsuit and a notice of hearing...he/she will say something along the lines of "you have been duly served according the laws of this state" and then turn around and walk away) If you get to this point, consult with an attorney in your state who handles debt-related cases but I would do so only if you have been served with a lawsuit or you have concluded that you are in such dire financial circumstances that you have no choice but to file for Chapter 7 or Chapter 13 bankruptcy.
If you do not pay, they still may not sue you as there is a balance between how much they stand to recover vs. the cost of actually taking you to court. Many collection agencies/law firms assume you will not show up in court to fight them and that they will get a default judgment against you so the balance can tilt in favor of filing a lawsuit against you (even if the debt is for only a couple thousand dollars or possibly even less). By the time you get through this process it can be years after the charge-off. If they actually file a lawsuit against you, it is often within weeks if not days of the statute of limitations running on the claim (which varies by the state in which you live). The statute of limitations varies depending on the type of debt (oral contract, written contract, type of account, etc) in each state but for your purposes, credit card debt is classified as an open-ended account (as established under the Truth-in-Lending Act). So, you need to look at the statute of limitations for your state for open ended accounts (which can be anywhere from 3-8 years based on where you live).
"Gotchas" - after a charge-off, you are usually better off to not talking to anyone trying to collect on the debt with the exceptions of sending the collection agency a letter demanding proof the debt is valid, a letter notifying them they failed to validate the debt if they do not respond to the debt validation letter within 30-60 days and possibly a cease communications letter if dealing with a 3rd party collection agency (searches for "debt validation letter" and "failure to validate debt letter" on the Internet should turn up dozens of sample letters). Why you should not talk to them: many collection agencies or debt collection attorneys will use every tactic possible to get you to forfeit some, if not all, of your legal defenses that might otherwise prevent them from collecting on the debt. They are well-practiced at this and will try to get you to admit to all sorts of things that can adversely affect your legal defenses to their collection efforts. Most of them will try to get you to admit the debt is valid years after the charge-off (which can make the debt enforceable for a longer period of time) or get you to sign some type of written agreement that will legally bind you to terms which are even worse than those you agreed to under the original credit card contracts. It is hard to imagine terms worse than those in the average credit card contract but I assure you it is possible and these may even include agreements for fixed legal fees and other excessive penalties for nonpayment which will kick in if you cannot pay as agreed under the terms of the new repayment agreement. If nothing else, by signing a new agreement, you admit that the debt is valid and it will reset the clock for statute of limitations purposes. This will give the collection agency/attorney more time to file a lawsuit against you and more evidence to use against you in court.
If they do file a lawsuit and you are served with it immediately contact an attorney in your area that handles debt collection cases. If the collection agency files the lawsuit and you are served, they still have to prove that the debt is valid and that the amount they are asking for is valid. In a relatively high percentage of cases they cannot prove anything as all they have bought from your credit card
company is a piece of paper that has your last known contact info, your social security number and a statement as to the amount you supposedly owed the credit card
company when it was charged off. They might also have an affidavit from and account manager claiming “the debt is valid according to their records. The person named in the affidavit claiming the debt is valid and that you owe it will be: someone you never met; who has never seen you; who could never point you out in a crowd and who will likely never show up in a court room to testify about anything related to your case.
Due to a number of rules of evidence, etc. their records are not enough to legally prove you owe them anything. However, you have to challenge their claim. In many cases, a decent defense attorney can send the collection agency`s attorney discovery requests to see what proof they actually have and they will conclude it is too much effort to fight it even at the initial stages of litigation. If so they will voluntarily dismiss the lawsuit against you. Why this happens: first, in their initial cost-benefit analysis the collection agency likely assumed you would not show up in court or hire an attorney to fight them. In that particular situation their flow chart looks something like this: you did not pay after they demanded payment > they file a lawsuit and have you served > you do not hire an attorney or otherwise file a proper answer to the complaint they filed against you within the legal time frame to respond (usually 20 days after you are served) > you are in default as you did not respond (serious legal consequences) > they show up at court and show that you were served and did not respond, they present the barest minimum of evidence to show their claim is valid and then get the judge to rule against you > they walk out with a court order (Default Judgment) that says you have to pay them (at this point, you would be in really bad shape). In contrast, if you challenge their claim their flow chart falls apart in a number of places, their expense in pursuing the claim goes way up and it is often just not worth it for them to actually go through with a trial due to the expense. As they probably do not have anything that amounts to sufficient evidence to prove you really owe the debt and the amount they claim you owe (unless you admit to it in some way), they likely could not win even if they did take you to court (and they know this).
The short answer to your question: you may not get sued at all, if you do, it may be three to eight years before you get sued depending on the statute of limitations for open-ended accounts in your state and whether the collection agency or law firm you are dealing with has a really aggressive nature when it comes to filing litigation. Before they file a lawsuit, the “gotchas” are letting them talk you into admitting something that could negate legal defenses against collection and most certainly letting them talk you into signing a new repayment agreement that has terms which would make the meanest loan shark blush or possibly turn green with envy. If you get sued the “gotchas” are: trying to deal with them without an attorney or sitting on your hands and doing nothing until you are in default.
That explanation is likely a little more extensive than it needed to be for an online response...it is the product of an attorney with too much coffee and an unusually light court schedule for this week....
Canada
