In May 2014, a client contacted me who has been sued for nearly $27,000 in the Law Division of Somerset County, NJ Superior Court by a collections law firm on an old Chase Bank N.A. credit card debt. The old debt (or as I call it, “zombie debt”) had been assigned to New Century Financial, a NJ based buyer of charged-off debts.
My client had made the last payment on the debt in May 2010, and had forgotten all about it until he was sued.
Under New Jersey’s statute of limitations, the lawsuit was timely as New Jersey provides a 6-year Statute of Limitations for credit card debt suits. The 6-year period generally begins to run from the date the final payment is made on the account.
The client had filed his own answer using the NJ Court’s free online forms. But the collection firm was starting to bear down on him, and feeling a bit overwhelmed, he contacted me for an initial consultation.
I located the Cardholder Agreement (i.e, contract) that Chase Bank N.A. was using for their credit card accounts at the time my client signed up for the card.
The Cardholder Agreement specifically stated (in all capital letters and bold font) that “The Agreement shall be governed by Delaware law regardless of where you reside, without regard to conflict of law principals.”
Many credit card agreements contain these “choice of law” provisions. Delaware is a common choice, as many corporations are based out of Delaware and the Delaware courts have laid down a substantial (and often very favorable/pro-corporate) body of case law and principals which are well understood by corporate counsel.
However, one thing I love about Delaware is that it provides a 3 year statute of limitation on lawsuits for old credit card debt. As suit was filed against my client nearly 4 years after his last payment, I filed a Motion for Summary Judgment requesting that the New Jersey Court:
1. Enforce the Choice of Law provision in the cardholder agreement, and use Delaware law and Delaware’s statute of limitations to adjudicate the case;
2. Dismiss the complaint with prejudice based on it having been filed past the Statute Of Limitations.
The collection lawyer phoned me immediately after receiving my motion papers, and offered to settle for a bit less than 1/2 the debt ($12,000).
I declined his offer and let the Judge decide my summary judgment motion.
I submitted reply papers to the opposition, and the New Jersey Superior Court judge carefully read and considered all of the motion papers and exhibits. The judge then issued a 7 page written opinion, ruling 100% in my client’s favor and dismissed New Century’s entire lawsuit! The NJ Court’s judge ruled that the Delaware statute absolutely applied to the case, and as such the lawsuit was filed too late. New Century Financial Services and the collection lawyers couldn’t collect a single penny!
This case amply illustrates why it is vitally important that you retain an experienced NJ Debt Defense attorney when you are being sued. There are often defenses to your collection case which you may not be aware exist.
An effective, aggressive and skilled NJ debt collections defense attorney can present these defenses to the Court zealously on your behalf, often resulting in the collectors walking away empty-handed. (Actually, the collectors lost money on this case, as they are out the $200 filing fee for the Complaint plus motion fees, etc). It’s a great feeling to “turn the tables” on the collection industry vultures, who often pay as little as a 12th of a cent on the dollar for these ancient “zombie” accounts.
Don’t be a victim of these money-grubbing vultures – call Scott today at 908-782-5313 for a FREE consultation about your debt case. Remember, they have lawyers working hard on their side- so don’t go it alone.