When debt buyers bring debt collection lawsuits to court, they usually sue on two claims(1) breach of contract, and (2) Account Stated. It’s Account Stated that debt collectors usually rely on for success in court.
Breach of Contract: As you know by now, creditors sell junk debt at a deep discount to debt buyers with very little or no documentation of the original contract, no record of the payments and finance charges, and no records of the debt assignments.
Original Creditors make so many different offers on credit cards to so many different people at so many different times that over several years, it becomes hard for the debt buyer like Midland Funding, Cache, Portfolio Recovery, and Asset Acceptance to keep track of all those agreements and actually produce a complete and coherent set of contract documents necessary to prove what the customer actually owes. As a result, Debt buyers are usually unsuccessful in proving their claim for breach of contract. But debt buyers know that fact when they go in for a motion for summary judgment. So, as a failsafe, the debt buyer depend on the reliable Account Stated claim to get the judgment against you.
Account Stated: The idea behind this theory is like this: if you were mailed the credit card statements, and you didn’t object to the statements, then you must owe the amount stated.
To defeat this theory you can take the factual approach and tell the judge:
(1) Plaintiff can’t prove you got the account statements in the mail; (2) Plaintiff can’t prove you used the card; (3) And if you got the account statements in the mail, Plaintiff can’t prove you made a payment on it; (4) There is no prior course of dealing between you and the junk debt buyer. And the junk debt buyer never sent you anything in the mail except a lawsuit; (5) Whatever letters the debt buyer did send your way in the mail were threats of lawsuits and demands for lump sum payment, but not actual account statements, containing terms based on the original contract, with itemizations and accrual of interest rates;
The legal approach to beating Account Stated is the the following :
Since Plaintiff has no evidence a contract (credit card agreement), then Plaintiff has no proof of the terms contained in the written contract necessary to prove that the account is accurately stated. If your credit card agreement provides for a fixed interest rate of 9.9% and you overlook the fact that you were charged 19.9% on the billing statement, are you obligated to pay 19.9% because you failed to object to the billing statement? Of course not, because there’s a written contract that says it’s 9.9% and that’s what controls. When a valid agreement addresses the terms of the contact, the plaintiff must produce it in court. If there is no written contract, then the debt buyer may just as well make up the payment terms and interest rates. When credit card agreement spells out the terms, the collector should not be able to recover more (or even less) than is provided for in the agreement.
If you are facing a credit card lawsuit, and set for a hearing on a summary judgment motion, you should really discuss your legal options with a lawyer before trying to argue against a breach of contact and account stated claim. These matters are complicated and should only be handled by an experienced consumer lawyer. Call attorney James Meyrat for help at phone number (210) 735-9911.