16 Oct Defending Lawsuits Brought By Debt Collectors
A few days ago Illinois bankruptcy lawyer Andy Miofsky discussed the fact that debt collectors often do not have the documents necessary to prove up their case when they sue on overdue credit card debts. This may defeat a claim for breach of contract, but credit card companies in New York have dreamed up another theory – one of “account stated.”
According to our friends at Wikipedia:
Under United States law, account stated is a statement between a creditor (the person to whom money is owed) and a debtor (the person who owes) that a particular amount is owed to the creditor as of a certain date. Often the account stated is a bill, invoice or a summary of invoices, signed by the customer or sent to the customer who pays part or all of it without protest. An account stated may also be established when the debtor retains the statement of account (for example the bill or invoice) without objecting, for an unreasonable length of time.
Essentially, that means that if a credit card company sends a bill and you don’t dispute it, then it’s presumed to be correct – and yours.
What that fails to address is the fact that credit cards are governed by federal law, which requires credit cards to be issued only in response to an application. If there’s no application then you can’t send out a credit card – period.
Following the line of logic, if a credit card company sends out a bill to someone that has no responsibility to pay the debt, federal law trumps the common law theory of “account stated” and holds that liability cannot be inferred just because the bill is sent and no dispute is made.
So why do credit card companies use this as a cause of action, knowing it to be a bad idea? Because the majority of debt collection lawsuits move to judgment based on the failure of the consumer to appear. Without an appearance, a judge does not rule on the validity of the debt or the lawsuit. So the credit card companies win yet again.
What to do? The next time you’re sued on a credit card debt, take immediate action – your financial future is at stake.
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