In 1978, the Supreme Court made a ruling that would change how banks dealt with credit card interest. The Marquette Bank opinion permitted national banks to export interest rates on consumer loans from the state where credit decisions were made to borrowers nationwide. Federal rules already existing which would not allow banks to set up operations outside their home state without a formal invitation from the legislature of the state they wanted to enter.
It wasn’t long before states like South Dakota and Delaware took full advantage of the new jobs the banks offered. South Dakota’s legislature first passed laws in 1980, effectively eliminating their existing usury laws, so Citibank could move their credit card operating headquarters to the state. Citibank eventually delivered 3,000 high paying jobs to the state that rewarded them with an operations base where they could ignore all the other state’s maximum usury rates and still do business.
In 1980, the Office of the Comptroller of the Currency (OCC) pegged the rate of interest at a certain number of points above the Federal Reserve discount rate. Specially chartered organizations like small loan companies and installment plan sellers would have their own rules. That means that the laws in most states do not have enough teeth to regulate credit card debt. Now, in many cases, the only way a person can relieve exorbitant debt from various banking institutions is by filing bankruptcy.
Credit card debt is one of the leading reasons people file for bankruptcy protection, but if you are “collection proof” and you do not have enough assets for creditors to collect to satisfy your debt, you may not need to file for bankruptcy protection at all. All states have a statute of limitations on debt collection.
Statute of limitations are basically divided into four debt categories by law. These categories include oral contracts, written contracts, promissory notes, and open-ended accounts. The latter category deals with credit card debt. The statute of limitations on all four categories in New York is six years. Going to court and winning a judgment against a debtor is another matter. A judgment in New York carries a statute of limitations of 20 years. The creditor must renew the judgment before the time frame ends if they want to keep an attachment or lien active.
Not all collection agencies play by the rules. Some collection agencies will call you after the statute of limitation has expired and try to get you to acknowledge you owe the debt. If they can get you to acknowledge or pay your debt, and it is a qualifying debt like a credit card debt, the statute of limitations begins again from that date.
What if collection agents call you to collect debt? Ask them to send you paperwork to verify your debts and the dates of the debt. If the statute of limitations has past for the verified debts, you can send them a cease and desist letter. Explain why you do not owe the amount, and ff they cannot verify the claim, you can send the collection agency a cease and desist letter anyway.
The Fair Debt Collection Practices Act (FDCPA) protects consumers by providing a fair playing field for debtors and creditors. The FDCPA states all collection agencies must verify any debts they claim you owe. If a debt is out of the statute of limitations or is unverifiable, the collection firm is prevented from pursuing the loan in a harassing manner. Continued violations could result in fines for the violators, including payment for court and attorney fees.
If you have assets to protect from creditors seeking a judgment and your debt has not reached the statute of limitations, you may need to consider filng for bankruptcy protection. Bankruptcy laws can be complicated. If you need relief from the stress of debt and you live in or around the metropolitan areas of Buffalo or Niagara Falls, New York, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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