Steve Harms

Thursday, July 19, 2012

Collecting Money: How much time do we have (statute of limitations)?

Most of us are aware that there are limitations on actions, that is, we only have so much time to file a law suit to enforce collection.

For the sale or leasing of goods, from staples to cars, the Uniform Commercial Code (UCC) applies in all states.  It imposes a four year statute of limitations.

However, on other contracts, we generally have a longer period of time (in Michigan, for example, we have six years) to bring suit after default or last payment made (that's a discussion in an of itself, for another time).

Well, a Michigan Court has just ruled that a credit card (this is a contract which should fall under the longer statute of limitations because it is NOT the sale or leasing of goods, per the UCC) does fall within the four year statute if it was USED to buy goods....this is not good logic...the court is wrong...none the less, that is the ruling!

The court totally overlooked the fact that a credit card is essentially a banking of borrowing money.  Regardless of what I use my card for, I'm borrowing money from the credit card company...that's the way I see it.

Anyway, the Michigan court noted that Indiana and other states have adopted the concept that a credit card use to buy goods is governed by the four year statute under the here I am...warning you to make a mental note that you may only have four years to bring an action on a credit card debt.  I may not agree with it, but I don't control the courts!

1 comment:

Brent Knopp said...

Thanks for this article. I am astounded by the way the courts in all states handle incurred debt (I'm in Seattle), and with a small collections agency myself I have decided that since I have limited amount of time to collect on a CC debt, I would fight fire with fire. I set up an online merchant account on our website to make payments process much quicker. In any state where you are working under the gun to recover debt, consider adding this useful tool to your website. I use Zeno Tools,

Anything to get that money quicker, I think. Thanks for the article as always.