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Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, "handshake agreement"). Remember a verbal contract is legal, if tougher to prove in court. Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed. Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note. Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account. Please note: a credit card is ALWAYS an open account. This is established under the Truth-in-Lending Act: TITLE 15 > CHAPTER 41 > SUBCHAPTER I > Part A > 1602 1602. Definitions and rules of construction(i) The term "open end credit plan" means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance. A credit plan which is an open end credit plan within the meaning of the preceding sentence is an open end credit plan even if credit information is verified from time to time. Keep in mind, though, that the state statute of limitations on a credit card may come down to whether the agreement is in writing or not; whether it meets the required elements of a written contract. For instance, in Missouri if the creditor is able to produce a written credit card contract, then the 10 year statute applies. If the creditor cannot show the existence of a written contract, then the 5 year statute would apply - credit card or not. Here is case law in Missouri to illustrate this point: In Capital One Bank v. Creed, 220 S.W.3d 874 (S.D. Mo.2000), the company alleged the parties entered into a contract, whereby the company would extend credit to the customer. The company alleged that the customer breached the terms of her contract by failing to pay the amounts for which credit was extended. The customer denied the allegations and asserted the affirmative defense that the action was barred by the statute of limitations. The appellate court ruled that the action was barred by the five year statute of limitations under Mo. Rev. Stat. 516.120 (2000). The customer made a partial payment on December 2, 1999, and the company's petition was not filed until January 3, 2005. The ten year statute of limitations under Mo. Rev. Stat. 516.110 was not applicable because the company did not produce a written promise by the customer to pay money. Why should you care about the Statute of Limitations (SOL) When does the Statute of Limitations start on a debt? For Statutes of Limitations on judgments, go here.
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State
Oral
Written
Promissory
Open-ended Accounts 3 3 3 3 4 3 6
State Statute: Open Accounts 6.2.37 4-3-118 09.10.053 HB 2412 337 13-80-103.5 Chapter 926 Sec. 52-576 Title 10 Sec.8106 12-301 95.11 9-3-25 HRS 657-1(4)
AL AR AK AZ CA CO CT
6 5 6 3 2 6 3
6 5 6 6 4 6 6
6 5 3 6 4 6 6
DE DC FL GA HI
3 3 4 4 6
3 3 5 6 6
3 3 5 6 6
4 3 4 4** 6
IA ID IL
5 4 5
10 5 10
5 5 10
5 4 5 or 10***
614.1.5 5-216 735 ILCS 5/13206 34-11-2-9 60-512 413.120 & 413.090 2-3494-4 14-205-752 5-101 260-2 600.5807.8 541.05 516.120 15-1-29 22-2-207 1-52.1 28-01-16 25-206 382-A:3-118
IN KS KY
6 3 5
10 5 15
10 5 15
6 3 5
LA ME MD MA MI MN MO MS MT NC ND NE NH
10 6 3 6 6 6 5 3 3 3 6 4 3
10 6 3 6 6 6 10 3 8 3 6 5 3
10 6 6 6 6 6 10 3 8 5 6 5 6
3 6 3 6 6 6 5 3 5 4 6 4 3
NJ NM NV NY
6 4 4 6
6 6 6 6
6 6 3 6
6 4 4 6
OH OK OR PA
6 3 6 4
15 5 6 6
15 5 6 4
6 3 6 6
2305.07 12-95A(1), (2) 12.08 42 Pa. C.S.5525(a) 6A-2-725 SEC 15-3-530 15-2-13 28-3-109 16.004 78-12-25 8.01-246 9A-3-118 4.16.040 893.43 55-2-6 1-3-105
RI SC SD TN TX UT VA VT WA WI WV WY
10 3 6 6 4 4 3 6 3 6 5 8
10 3 6 4 4 6 6 6 6 6 15 10
6 3 6 6 4 6 6 5 6 10 6 10
4 3 6 6 4 4 3 4 3 6 4 8
** Georgia Court of Appeals came out with a decision on January 24, 2008 in Hill v. American Express that in Georgia the statute of limitations on a credit card is six years after the amount becomes due and payable *** An Illinios appeals court ruled on May 20, 2009, that the statute of limitations on a credit card debt without a written contract was 5 years. The material provided in this table for informational purposes only and should not be construed as legal advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors. __________________
The Statute of Limitations does not cause your debt to go away after it expires. If the creditor files suit, the consumer has an absolute defense. The consumer must offer the new evidence to avoid a judgement. The evidence will consist of papers the consumer files to support his claim. If the creditor sues you, and you do not prove to the court that the Statute of Limitations expired, you will have a lost lawsuit and a judgment against you.
Please review the exact state statutes and the fine print associated with them before relying on this website's info. Your situation may not apply.
Summation:
Even though a debt is an absolute promise to pay, if the Statute of Limitations expiring is in force and the creditor tries to force you to pay the debt, you have the right not to fulfill the promise (debt). You may also read the FTC's publication on Time Barred Debts.
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