Can a collection agency take you to court?

Collection agencies are simply collectors, and in that capacity, act as agents for the original creditors. An outside collection agency does not have the power to sue or instigate legal action of its own accord and without the permission of the original creditor. However, if the account is sold to a third party collector, and a settlement is not made, that agency can refer it to an attorney for legal action because it has become the owner of the debt and can therefore enforce it. In some states, only an attorney may represent a corporation in court, but as stated below, that rule may not apply with respect to claims of all sizes.

The underlying basis of the debt, such as a credit card contract, will generally specify the terms of resolving a dispute, usually, suit or arbitration. By signing the underlying contract, the consumer will have agreed to the dispute resolution mechanism stated therein. If the contract does not provide for arbitration (which is often faster, may be cheaper, but some do not think always as fair to the consumer), the consumer does not have to agree to it, and can insist on "being sued".

That said, a "go sue me" attitude is counterproductive. Judicial process should always be a last resort, as it is time consuming, can be costly, and can have more lasting negative credit implications. However, it may be useful as a tactic, because the creditor may think longer and harder about suing than about other means of collection. If he/she/it has to hire a lawyer to file the suit, attorney's fees may be incurred (although you may ultimately be liable for them depending upon the contract terms), court costs will be incurred (same proviso), and/or the creditor may have evidentiary problems in proving a disputed debt. Also, depending upon the size of the debt, a lawyer may be be unwilling to file suit on it because the return on the time investment will be de minimus. Even at that, the rules of small claims court (if the claim is of a size to qualify for that court's jurisdiction) may allow the creditor or new owner of the debt to represent him/her/itself without the need for an attorney.

ADDED: The first response is clear and correct. Do not let a mere "collection agency" bully you with a threat of court action. However - as stated, if the collection agency actually purchased the delinquent account, it became the 'legal' owner of the debt and most certainly can, and do, take the debtor to court (usually Small Claims Court) to collect on its investment. It is up to the judge/hearing officer as to whether the case is sent to mediation where an impartial third party tries to assist the parties in reaching their own settlement of the dispute. If a settlement is not reached, the parties return to court for trial, and one side wins and the other side loses.

The long and the short of it is that if you owe the money, you'd better make a good faith effort to pay your 'just' debt.


The Statue Of Limitations is and affirmative defense (ie: you have to show up or file an answer stating that as your defense), and it is only tolled (ie: starts ticking again) if there is a payment made or a note signed affirming the debt. An acknowledgment will not toll the statue in most if not all states. Yes they can file a lawsuit against you if the debt is assigned.

PS: I find it almost comical how people find advice concerning lawsuits on what a collection agency can and can not do. I just had a case where a lady brought and argued her case with what appeared to be a print out from a post like the above. Let me give you some sound advice! Pick up the phone call an attorney that is in good standings with the bar association in your state and ask him/her. Because, the lady I'm referring to lost her case on the arguments she printed out and was somewhat embarrassed to find that the Judge was less that cooperative with her new found faulty knowledge!