Illinois - SOL and CC as open account

[acarr]

What is the name of your state? IL

Hello,

I'm in the midst of fighting a credit card collection and trying to use the same SOL defense the user ttoby used in the series of posts under https://forum.freeadvice.com/showthread.php?t=151721.

In my case the credit card was opened in 2000. The collections attorney has provided NO record of purchases except a statement that simply lists a balance due.

My first line of defense is that they are barred from bringing the case due to SOL. I've read through all the IL Credit card debt posts here on FreeAdvice and have seen it mentioned numerous times that credit cards are considered open accounts in IL and therefore have a 5 or 6 year SOL. Does anyone have case law or specific statute you can point me to in order to prove this? Most collections attorneys I've spoken with say the SOL is 10 years because credit cards are considered written contracts, and subject to 735 ILCS 5/13‑206 instead of 735 ILCS 5/13‑205. This is according to 316 N.E.2d 209 (1972) and 432 N.E.2d 1309 (1982). Nowhere do I see mention of the Federal Statutes - Truth in Lending Act - as mentioned by some posters.

If anyone can point me to a case that proves credit cards are not written contracts and are considered open accounts in Illinois, I'd GREATLY appreciate it.

My second line of defense (and I'd love to hear you thoughts on it) assumes credit cards are written contracts, but that the attorney must PROVE a written contract existed. The case they have cited says that the contract is NOT formed when the credit card agreement is entered into, but instead when a purchase is made and the credit card holder signs the purchase receipt - THAT is the contract. If that is in fact the case, doesn't the collections attorney have to prove that said contract existed by providing a copy of the purchase receipts, or at the very least a statement with the specific purchases made? MUST I demand verification of debt, or can I just argue this in court? We already have the court date set...is it too late to ask for the verification?

Again, I'd appreciate your thoughts!What is the name of your state?

 

[TigerD]

You are going to lose on both counts.

 

[mommyoftowboys]

http://www.creditinfocenter.com/rebuild/statuteLimitations.shtml


Here's a website that lists the SOL.

In IL it says ten years, for written contracts. 5 years on Open.And I would think a credit card is open ended, when looking at my own credit report, it shows our one credit card that we have open right now, and we pay as agreed is open ended.


If you want verification of debts though- Put it in writing and send it certified. Under the fair debt practices you are legally entitled to verification of the debt, you just have to put it in writing.

If they don't send it in 30 days the verification, and they are trying to sue you, you have a defense.
They didn't validate the debt.

 

[mommyoftowboys]

What is the name of your state? IL

Hello,

I'm in the midst of fighting a credit card collection and trying to use the same SOL defense the user ttoby used in the series of posts under https://forum.freeadvice.com/showthread.php?t=151721.

In my case the credit card was opened in 2000. The collections attorney has provided NO record of purchases except a statement that simply lists a balance due.

My first line of defense is that they are barred from bringing the case due to SOL. I've read through all the IL Credit card debt posts here on FreeAdvice and have seen it mentioned numerous times that credit cards are considered open accounts in IL and therefore have a 5 or 6 year SOL. Does anyone have case law or specific statute you can point me to in order to prove this? Most collections attorneys I've spoken with say the SOL is 10 years because credit cards are considered written contracts, and subject to 735 ILCS 5/13‑206 instead of 735 ILCS 5/13‑205. This is according to 316 N.E.2d 209 (1972) and 432 N.E.2d 1309 (1982). Nowhere do I see mention of the Federal Statutes - Truth in Lending Act - as mentioned by some posters.

If anyone can point me to a case that proves credit cards are not written contracts and are considered open accounts in Illinois, I'd GREATLY appreciate it.

My second line of defense (and I'd love to hear you thoughts on it) assumes credit cards are written contracts, but that the attorney must PROVE a written contract existed. The case they have cited says that the contract is NOT formed when the credit card agreement is entered into, but instead when a purchase is made and the credit card holder signs the purchase receipt - THAT is the contract. If that is in fact the case, doesn't the collections attorney have to prove that said contract existed by providing a copy of the purchase receipts, or at the very least a statement with the specific purchases made? MUST I demand verification of debt, or can I just argue this in court? We already have the court date set...is it too late to ask for the verification?

Again, I'd appreciate your thoughts!What is the name of your state?

I didn't read everything on the site I posted-
Yes Credit Cards are always open ended accounts. Meaning the SOL is 5 years in IL.

 

[TigerD]

I didn't read everything on the site I posted-
Yes Credit Cards are always open ended accounts. Meaning the SOL is 5 years in IL.

Wrong. Credit cards fall under the written contracts.

DC

 

[skidmarks]

Wrong. Credit cards fall under the written contracts.

DC

Wrong. Credit cards are open accounts in IL. revolving account does not meet written contract threshold since there are no specific terms of payments nor charges are outlined before services provided.

A collection agency wanted to have to court define CC account as written contract withdrew the case before the court ruled on it and settled the cases out of court. My take on it is that the debt collectors realized that the court was going to rule against them.

IIRC correctly the case was against a Rockford attorney, the case was settled last year

ILLINOIS SOL & CODE FOR CREDIT CARD EXCLUSION AS WRITTEN CONTRACT (735 ILCS 5/13-205)

 

[Kanchazi]

this can give you some insight even if its FL. Law

The SoL is based on weather it is founded on a written instrument. They need to have proof (like a signed contract) for the ? year SoL to apply.

If they have to resort to "parol evidence" to prove libility you can argue that the ? year SoL applies.

Review this case law:

a. "...action is not founded on written instrument where evidence of liability consists partially of written cardholder account and security agreement but writing is incomplete to establish liability -- Accordingly, contract is regarded as oral for statute of limitations purposes." PORTFOLIO RECOVERY ASSOCIATES, LLC, Appellant, v_ PAUL FERNANDES 13 Fla. L. Weekly Supp. 560a 2006

b. “Where resort to oral testimony was compelled to make complete the showing of any legal liability incurred by defendant arising out of letter concerning sale of plaintiff's stock, timeliness of plaintiff's action to recover for breach of contract to sell the shares and remit proceeds to him was governed by Florida's three-year limitation period governing actions on oral contracts, rather than the five-year period governing actions on written contracts."
Klein v. Frank, 534 F.2d 1104. C.A.5 1976.


c. “Contract action is not founded upon written instrument, for purpose of statute of limitations, where written instrument is link in chain of evidence to prove cause of action, but does not on its face establish all elements of plaintiff’s claim.” ARDC Corp. v. Hogan, 656 So.2d 1371 (Fla. App. 4 Dist. 1995), review denied 666 So.2d 143.


d. “Where an agreement as set forth in writing is so indefinite as to necessitate resort to parol evidence to make it complete in applying the statue of limitation it must be treated as an oral contract.” McGill v ****rell, 101 So.2d 199 (Fla. 1924) Id at 201.

 

[skidmarks]

The SoL is based on weather it is founded on a written instrument. They need to have proof (like a signed contract) for the ? year SoL to apply.

If they have to resort to "parol evidence" to prove libility you can argue that the ? year SoL applies.

Review this case law:

a. "...action is not founded on written instrument where evidence of liability consists partially of written cardholder account and security agreement but writing is incomplete to establish liability -- Accordingly, contract is regarded as oral for statute of limitations purposes." PORTFOLIO RECOVERY ASSOCIATES, LLC, Appellant, v_ PAUL FERNANDES 13 Fla. L. Weekly Supp. 560a 2006

b. “Where resort to oral testimony was compelled to make complete the showing of any legal liability incurred by defendant arising out of letter concerning sale of plaintiff's stock, timeliness of plaintiff's action to recover for breach of contract to sell the shares and remit proceeds to him was governed by Florida's three-year limitation period governing actions on oral contracts, rather than the five-year period governing actions on written contracts."
Klein v. Frank, 534 F.2d 1104. C.A.5 1976.


c. “Contract action is not founded upon written instrument, for purpose of statute of limitations, where written instrument is link in chain of evidence to prove cause of action, but does not on its face establish all elements of plaintiff’s claim.” ARDC Corp. v. Hogan, 656 So.2d 1371 (Fla. App. 4 Dist. 1995), review denied 666 So.2d 143.


d. “Where an agreement as set forth in writing is so indefinite as to necessitate resort to parol evidence to make it complete in applying the statue of limitation it must be treated as an oral contract.” McGill v ****rell, 101 So.2d 199 (Fla. 1924) Id at 201.

Sorry, we are talking Illinois not Florida.

ETA: Come to think of it I agree

There are however credit cards that were issued without a written contract.

Quite a few people have them yours truly included their SOL in IL would probably be 5 yrs

Here's the Illinois case on written contact on credit card that was settled The plaintiff sued a junk debt purchaser called Credigy which pursued the plaintiff for credit card debt which was older than 5 years. Plaintiff sued Credigy in District court and Credigy settled the case with prejudice. The Federal Court never issued a ruling on it.

Rawson v Credigy FDCPA Suit

http://members.aol.com/discussiondox/dox/
Illinois still remains murky in regards to CC. I believe that consumers will prevail upon bill
collectors on written or open contract SOL.

Just as Rawson did.

 

[acarr]

IL CC as written contract or open account

Thanks for all the replies so far. The case cited by the collections agency is Garber v. Harris Trust and Savings Bank 104 Ill. App.3d 675 (1982) that says the a credit card is a written account - not because of any credit card agreement upon issuance of the credit card but because of the signature each time the debtor uses the card to make a purchase - it is THOSE receipts that create a written contract. But couldn't you argue that the debt collector would need a copy of each and every receipt to prove a written contract for each purchase? It just doesn't make sense for the written contract to be based on each purchase alone - because then the SOL would be for each "contract" and thus each purchase. And yet if it is based on the purchases as a whole, then it is clearing a revolving account - and open - thus subject to the 5 year SOL instead of 10 - right?

The other case the collections attorney is citing is Harris Trust and Savings Bank v. McCray 21 Ill. App.3d 605 (1974) - but that case decided whether or not a credit card debt fell under the 10 year SOL as a contract or the UCC's 4 year SOL as a purchase of goods. Because the credit card was a bank card and not a merchant card, they said that it fell under the 10 year SOL not UCC. But this doesn't take into consideration the possibility that the credit card is neither a written contract, NOR a sale of goods, but is an open account and subject to a 3rd SOL of 5 years under ILCS 5/13-205 (essentially the catch all SOL provision for contracts which states if neither UCC nor a written contract, then subject to 5 year SOL).

So really I need something that proves a bank credit card (as opposed to merchant card) IS in fact an open account. ANd if an open account it falls under the shorter SOL.

It seems that in almost every other state, a credit card is considered an open account. Could it be that Illinois is just different?

 

[acarr]

Illinois Bar CLE materials

Oh, and on a slight tangent I thought it was interesting that when reviewing the IICLE materials distributed by the Illinois State Bar today, all information was presented from the standpoint of the debt collector - not the consumer. It had all this information about how to sue, but not how to defend. And no where did it list SOL issues.

 

[acarr]

Excellent SOL Defense for IL

Here's the Illinois case on written contact on credit card that was settled The plaintiff sued a junk debt purchaser called Credigy which pursued the plaintiff for credit card debt which was older than 5 years. Plaintiff sued Credigy in District court and Credigy settled the case with prejudice. The Federal Court never issued a ruling on it.

Rawson v Credigy FDCPA Suit

http://members.aol.com/discussiondox/dox/
Illinois still remains murky in regards to CC. I believe that consumers will prevail upon bill
collectors on written or open contract SOL.

Just as Rawson did.

This is fantastic information - what this law firm is arguing is exactly what I was looking for. Thank you so much for website - I REALLY appreciate it.

 

[Kanchazi]

Acarr a credit card can be either a written contract or an Open Account. It all depends on the proof that the plaintiff prooves in court. Thats were you have to be informed to fight them . But remember its in the proof that they present which is going to decide if the credit card falls under written or open.

 

[GulfBreeze]

Wrong. Credit cards fall under the written contracts.

DC

I take issue with this because it is simply wrong.....

Credit cards are NOT written contracts!

Why....well, let me enlighten you DC.

Using VA law as an example:
The Fairfax County Circuit Court held that

“In order to constitute a written contract, the >essential terms of the agreement must be obvious on the face of the writing without recourse to parole evidence.”

Virginia courts have further discussed service contracts and have found "certainty and completeness" as essential elements of that type of contract. The essential elements include the:
1. nature and extent of the services to be performed,
2. person to whom the services will be rendered, and
3. compensation to be paid for the service.

An Open Account usually lacks: 1.) Specific mention of the nature and extent of the goods or services (medical treatment, hardware, etc.) to be purchased or performed except in a very general way and; 2.) There is no mention of the nature of charges or the payments required.

Open Accounts usually lack certainty and completeness. For instance, many give the beginning time but there is no contemplated ending date, simply because the agreement is open-ended; many specify the goods or services only in the most general terms; many may be signed by only one of the parties; and some make no mention of a contract but like in some medical treatment documents, may refer only to a Apolicy@ regarding financial responsibility.

Virginia common law, as well as the common law of other states, has drawn a distinction between contracts and Open Accounts. Whereas a contract envisions a single, defined interaction between parties, an Open Account is essentially a relationship in which a Aseries of individual but related transactions@ take place between the offeror and offeree.

The Supreme Court of Virginia settled the matter of first impression by distinguishing between running accounts that operate under a single continuing contract and Open Accounts.

• “Further, action is not founded on written instrument where evidence of liability consist partially of written cardholder account and security agreement but writing is incomplete to establish liability–According, contract is regarded as oral for stature of limitations purposes”
Portfolio Recovery Associates, LLC v Paul Fernandez 13 Fla L. Weekly Supp. 560, 561

• Although evidence of liability relied on may be partly written, the transaction may be regarded as an oral one, if the writings are so indefinite or incomplete as to necessitate oral testimony to establish liability on the part of the defendant in terms of the transaction.
Johnson v. Harrison Hardware & Furniture Co. (1934) 119 Fla. 470, 152 So. 708, rehearing denied 119 Fla. 471, 160 So. 878.

Contrary to common wisdom, an informal exchange of promises can still be binding and legally as valid as a written contract. A spoken contract should be called an oral contract, which might considered a subset of verbal contracts. Any contract that uses words, spoken or written, is a verbal contract. Thus, all oral contracts and written contracts are verbal contracts. This is in contrast to a "non-verbal, non-oral contract," also known as "a contract implied by the acts of the parties", which can be either implied in fact or implied in law.

 

[Chien]

These acerbic and unqualified assertions about written contracts vs. open accounts are becoming humorous. We all know or should, that the courts are in flux and are going both ways. An inability to be definitive is nobody’s fault. For the first time, I unreservedly agree with Skidmarks. “Illinois [and the very few other states that have published opinions] still remains murky in regards to CC.”

The FTC has invited comments in 2007 and 2008 in recognition of the need to amend and clarify the TILA to bring it into accord with contemporary practice. It’s to be hoped that may resolve this issue as well. In the meantime, why not give the OPs such relevant cites as there are, or tell them to flip a coin?

This thread has citations from the 20s and 30s offered in support of arguments about an industry that didn’t come into existence until the 50s. Federal court decisions purport to dictate the outcome of state court cases and vice versa. Slip opinions that don’t make it to the appellate level and Federal cases that, as Skid again points out, never went to judgment may be instructive but don’t tell anybody anything conclusive, despite how you think it should or want it to ultimately be resolved.

Even if a state were four-square on one side of the fence or the other, it doesn’t dictate where another state would be. Anyone who knows Full Faith and Credit knows it’s not absolute.

There was a time when the status of credit cards was unquestioned. That time has passed. This thread wouldn’t exist if there was uniformity of opinion, including among judges, that “Credit cards are NOT written contracts”. Live with it.

 

[GulfBreeze]

Wrong. Credit cards fall under the written contracts.

DC

Ignore DebtCollector's comments. He is not educated on any statutes and speaks before thinking. What will be asked in court is, does the exhibit establish all the elements needed to be a WRITTEN CONTRACT. They have to be all on the face of the instrument and not resort to linking them together thru testimony. There is case law in several states, not just FL. A TERMS is not considered a WC contract. A SIGNED SLIP is not considered a WC contract. A STATEMENT is not considered a WC contract. In their minds, having all of these makes it one, but you must link them together and not ONE OF THEM have everything along with your signature on it to make it a written contract. Also, repeated transactions are expected, making it a OPEN END ACCOUNT and the TILA defines this as well. Each state would have to apply the lesser SOL for these types.