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Suit filed after statute of limitations end

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The Indiana Court of Appeals reversed summary judgment for a company that purchases and collects charged-off credit card debt, ruling the statute of limitations prevented the company from going after a delinquent consumer.

Jason Smither obtained a Mastercard account from Providian Bank in 1999. On Feb. 9, 2000, he had made a payment toward his $1,700 debt on the card but never made another payment or charge on the card. Providian "charged off" the debt Sept. 18, 2000, but kept sending monthly statements to Smither, eventually requesting a minimum payment of $670 on the outstanding balance in December 2000. Asset Acceptance purchased Smither's account in December 2001 from Providian Bank. On May 30, 2006, Asset sued Smither seeking damages of $2,157.62 plus interest.

Asset tried serving Smither twice at an incorrect address, and the trial court granted default judgment for the company. The court later ordered the case closed for failure to prosecute but noted the case could be redocketed in the future. Around this time, Smither discovered the default judgment by looking at his credit report and contested the judgment saying the statute of limitations had passed. The trial court granted summary judgment for Asset.

Even though Asset didn't introduce the account agreement applicable to Smither's card, the appellate court in Jason Smither v. Asset Acceptance LLC, No. 55A04-0902-CV-70, used the boiler plate language regarding default and acceleration to decide the appeal. Using Portfolio Acquisitions LLC v. Feltman, 909 N.E.2d 876, 881 (Ill. App. Ct. 2009), the judges decided that Indiana Code Section 34-11-2-7(1), which governs actions on accounts and unwritten contracts and has a six-year statute of limitations, is appropriate to use when ruling on attempts to collect credit card debt.

Feltman established credit card accounts aren't like promissory notes or installment loans because the amount of debt a consumer has may be in flux, wrote Judge Michael Barnes. He also noted that credit card accounts closely resemble the common law definition of an "open account." The general rule is that the statute of limitations for an action on an open account "commences from the date the account is due."

"Whether we consider the statute of limitations to have begun running on the date of Smither's last payment or the next payment due date thereafter, Asset's lawsuit filed on May 30, 2006, was more than six years after both dates," wrote Judge Barnes.

Asset argued it was entitled to delay the running of the statute of limitations because the credit card agreement governing Smither's account had an optional acceleration clause that it used when it "charged off" his account in 2000.

Even if the Court of Appeals assumed that a credit card company could delay the running of the statute of limitations by waiting to invoke an optional acceleration clause, Providian never invoked it and Asset had no evidence equating a debt "charge off" with the exercise of an optional acceleration clause. Even if Providian believed it was invoking the clause, it never took any affirmative action to notify Smither of that fact, wrote Judge Barnes. The first time Asset or Providian requested immediate and full payment from Smither was after the lawsuit was filed in 2006. Thus, the suit is time-barred.

The judges remanded for summary judgment to be entered for Smither.

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  1. My mother got temporary guardianship of my children in 2012. my husband and I got divorced 2015 the judge ordered me to have full custody of all my children. Does this mean the temporary guardianship is over? I'm confused because my divorce papers say I have custody and he gets visits and i get to claim the kids every year on my taxes. So just wondered since I have in black and white that I have custody if I can go get my kids from my moms and not go to jail?

  2. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  3. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

  4. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  5. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

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