Unsecured Debt

Because credit cards are not a secured form of credit, the card company has no collateral to collect if the debt goes unpaid. The only way for it to get money back is to sue or try to get the debtor to pay.

Statute of Limitations

Credit card issuers have to sue before the statute of limitations on debts runs out. This limit is set by each state. It can be as short as two years or as long as 10 years.

Choice of Law

Though each state has a statute of limitations on debt, some card agreements have terms that choose which state's laws will apply to debt collections. These usually increase the amount of time that the card issuer has to collect, regardless of what state the cardholder is in.

Debt Sales

Credit card debt is sometimes sold to other companies or collections agencies that specialize in collecting bad debts. No matter who buys the debt, the statutes of limitations still apply, and the buyer of the debt has to abide by those rules.

Credit Scores

Late payments, collections actions and lawsuits can damage a card user's credit score whether or nor the suit is successful. Also, the card issuer will often report a charge-off on the debt to indcate the creditor thinks the debt won't be repaid. This is a very damaging entry on a credit report.

Source:

FTC: Knee Deep in Debt

Debt Consolidation Care: Can you be sued for credit card debts?