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THE LAW: Uncertain Time Limits on Collecting Credit Card Debt

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BY BRAD R. BERGMOOSER

Collecting delinquent credit card loans may not be as simple as filing a court claim. That’s because much ambiguity surrounds what type of agreement is entered into between the cardholder and the issuing credit union. Is your statute of limitation up? Read on for some sound guidance on the issue.

Does your credit union have delinquent credit card loans? If the answer is yes, you should know how long you can go to court to collect the debt. While this seems easy enough, the twist comes in how the time frame is determined and the fact that not every state follows the same rule.
Collecting a delinquent loan balance in court is actually pursuing a breach of contract claim – an action with different statutes of limitation depending on how the agreement is interpreted. Endless discussion exists on this interpretation, but the best way to approach it is to think of an agreement as being either a “written agreement” (which has a longer statute of limitation) or an “oral agreement” (which has a shorter statute of limitation). The question then becomes: “Are credit card loans made from an oral or written agreement?” Unfortunately, there is no one answer.

“Oral Contract” Credit Card Loans
Classifying credit card loans as oral agreements seems contrary to how the process works since applying, receiving and making payments on credit cards comes with so much written material (including an “agreement” the member receives with the plastic card). In analyzing contracts, however, courts limit what is considered a written agreement. As a result, an “oral agreement” isn’t necessarily one that is spoken between the credit union and a member. Rather, it is one that doesn’t meet all the requirements of a written agreement.

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