Statute of Limitations on credit card debt


M

Mike

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T

Thoth

Mike said:
I am having an issue determining the SOL for credit card debt in
Illinois. The question is this, is CC debt considered an "open
account" or a "Written contract". I have had differing opinions on
both sides but no definitive answer. Here are the sources I've
checked so far;<snip>
If someone defaults on a credit card account it is a breach of a written
contract. I could find nothing in my cursory search of the Illinois
Statutes about "open account." I do not believe that the UCC section
applies to credit card debt. The operative sections regarding written
contracts is below.

http://tinyurl.com/2q8hq

(735 ILCS 5/13-206) (from Ch. 110, par. 13-206)
Sec. 13-206. Ten year limitation. Except as provided in Section 2-725 of
the "Uniform Commercial Code", actions on bonds, promissory notes, bills of
exchange, written leases, written contracts, or other evidences of
indebtedness in writing, shall be commenced within 10 years next after the
cause of action accrued; but if any payment or new promise to pay has been
made, in writing, on any bond, note, bill, lease, contract, or other written
evidence of indebtedness, within or after the period of 10 years, then an
action may be commenced thereon at any time within 10 years after the time
of such payment or promise to pay. For purposes of this Section, with regard
to promissory notes dated on or after the effective date of this amendatory
Act of 1997, a cause of action on a promissory note payable at a definite
date accrues on the due date or date stated in the promissory note or the
date upon which the promissory note is accelerated. With respect to a demand
promissory note dated on or after the effective date of this amendatory Act
of 1997, if a demand for payment is made to the maker of the demand
promissory note, an action to enforce the obligation of a party to pay the
demand promissory note must be commenced within 10 years after the demand.
An action to enforce a demand promissory note is barred if neither principal
nor interest on the demand promissory note has been paid for a continuous
period of 10 years and no demand for payment has been made to the maker
during that period.
(Source: P.A. 90-451, eff. 1-1-98.)

http://www.law.cornell.edu/ucc/2/2-725.html
§ 2-725. Statute of Limitations in Contracts for Sale.
(1) An action for breach of any contract for sale must be commenced within
four years after the cause of action has accrued. By the original agreement
the parties may reduce the period of limitation to not less than one year
but may not extend it.

(2) A cause of action accrues when the breach occurs, regardless of the
aggrieved party's lack of knowledge of the breach. A breach of warranty
occurs when tender of delivery is made, except that where a warranty
explicitly extends to future performance of the goods and discovery of the
breach must await the time of such performance the cause of action accrues
when the breach is or should have been discovered.

(3) Where an action commenced within the time limited by subsection (1) is
so terminated as to leave available a remedy by another action for the same
breach such other action may be commenced after the expiration of the time
limited and within six months after the termination of the first action
unless the termination resulted from voluntary discontinuance or from
dismissal for failure or neglect to prosecute.

(4) This section does not alter the law on tolling of the statute of
limitations nor does it apply to causes of action which have accrued before
this Act becomes effective.
 
M

Mike

I'm still not convinced it's a written contract. The first link I
referenced states that credit card debt is an "open account". Thus my
confusion.

What category does my debt fall under?
Many times you cannot figure out if your debt is a contract, open end
or revolving. Below we address this issue.

--Oral Contract: You've agreed to pay money back via a verbal
agreement. This can include your word, his word and a witness. These
are harder to prove but are recognized as "oral contract".

--Written Contract: You have signed a contract or document promising
to repay a loan or debt. Example is medical bills, cell phone bill,
closed end signature loan or some secured loans like auto.

--Promissory Note: It is like a contract loan except it contains more
information about payback. Such information can be interest,
principal, late fees etc. A home loan or HELOC can be a promissory
note.

--Open Ended Accounts: Just what it says, "open end" ie: a credit card
debt or revolving line of credit.


The statute you quote clearly states "written contract" and ten years
so that is clear, but it doesn't classify credit card debt as "open"
or "written"?

There must be rulings in the Il. courts on this subject???
 
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T

Thoth

Mike said:
I'm still not convinced it's a written contract. The first link I
referenced states that credit card debt is an "open account". Thus my
confusion.
The sections of the website you quote appear to be a series of broad
generalities without citation. The Illinois Statutes are primary authority.
A search of the entirety of Illinois Statutes has one hit for "open
account". You may need to contact an attorney in Illinois to have your
question answered to the degree of certainty you are looking for.

(205 ILCS 700/5)
Sec. 5. Definitions. As used in this Act, the following words have the
meaning ascribed to them in this Section.
"Financial institution" means a "State bank", "national bank", "trust
company", or "insured savings association", as those terms are defined in
Section 2 of the Illinois Banking Act.
"Deposit account" includes without limitation any demand deposit
account, checking account, negotiable order of withdrawal account, money
market account, savings account, share account, member account, stock
deposit account, certificate of deposit, time deposit, << open account>> ,
or other credit of a depositor with a financial institution and property
held in safe-deposit whether by the financial institution or in a
safe-deposit box or other leased receptacle.
"Depositor" means a person who, by agreement with a financial
institution, has the right to issue orders or instructions concerning a
deposit account.
"Person" includes without limitation an individual, a public or private
corporation, a government, a partnership, an unincorporated association, and
any other legal entity.
(Source: P.A. 89-601, eff. 8-2-96.)
 

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