Consumer Debt Defense

Lawsuits filed by creditors against consumers focus on recovering the debt owed to make the creditor whole again. Sometimes these lawsuits are filed as “Account Stated” or “Open Account” actions. Although similar, it is important to understand and distinguish the difference between Account Stated and an Open Account since they require different burdens of proof.

Account Stated

An “account stated” is an agreement between people who have had previous transactions, fixing the amount due in respect to such transactions and promising payment. It must be based on prior dealings between the parties resulting in a subsisting debt and it cannot rest upon a liquidated demand which the defendant is already bound to pay. For an account- stated claim to be valid, there must be (1) agreement that a certain balance is correct and due, and (2) an express or implicit promise to pay that balance. An account stated typically arises from the rendition of a statement of transactions between the parties, with a failure on the part of the party to whom the account was rendered to object within a reasonable time or its express acquiescence in the account as rendered. Absent express approval, however, an account stated is little more than a tacit admission of correctness that puts the burden on the objecting party to show wherein it is wrong. There can be no liability on an account stated if there has been no mutual agreement. Defenses to an account stated are limited and include fraud, duress, mistake, or equitable grounds for avoidance of an obligation.

Open Account

When people have a series of transactions between them resulting in an ongoing account (open account), a lawsuit may be filed to recover the amount unpaid under that open account. An open account is an unsettled debt arising from items of work and labor, with the expectation of further transactions subject to future settlements and adjustments. The elements to an action on open account are. 1.) Sales agreement, 2.) An amount claimed is either agreed price or reasonable value and 3.) the items were actually furnished. There is a four-year period in which to file an action on an open account and the statute of limitations begins to run when payment is due for items charged to the account which is immediately, unless otherwise agreed.

Credit Card Lawsuits

The number of credit cards held by consumers in the United States is a staggering 364 million. The average person has 3.7 credit cards and has credit card balances totaling $1,700 at any given time. The total amount of revolving debt owed on credit cards reached over one trillion dollars in 2018. Despite these statistics, most people agree that credit cards serve a legitimate purpose in our society. They help to ensure that we receive the necessary food, medicine, transportation, and housing needs that are vital. Unfortunately, it is far too easy to fall behind in credit card payments. Once behind, it is difficult to catch up and pay off the interest owed. This results in additional stress, anxiety and loss of enjoyment of life. The inevitable result is lawsuit filed by the credit card company or a third party who seeks to obtain a money judgment for the balance owed.

The Credit Card Agreement

The credit card agreement is a central document in any credit card dispute. The agreement regulating use of the credit card is generally attached to the application for issuance of the credit card. It usually provides for cardholder responsibility for all use of the card, for payment of the charges shown in the periodic statements.


Defenses to credit card lawsuits typically center on ensuring that the party has standing to sue or is otherwise authorized to file suit, that the figures sought are correct, the statute of limitations has not run and that notice and an opportunity to be heard is given to the Defendant. Additionally, the Truth in Lending Act and Regulation Z generally applies to each individual or business regularly offering or extending credit to consumers primarily for business, family, or household purposes when the credit is subject to a finance charge or is payable by written agreement in more than four installments. Nevertheless, when a credit card is involved, some of the provisions of the Truth in Lending Act apply even if the credit is not subject to a finance charge or is not payable by a written agreement in more than four installments. These special credit card provisions apply to business credit, commercial credit, and consumer credit.

The bottom line is that the Truth in Lending Act prohibits the issuance of credit cards without solicitation, limits cardholder liability for unauthorized uses of the accepted credit card, and imposes penalties for fraudulent use of credit cards to obtain goods and services. It also provides that, subject to a limitation as to amount, the card issuer may be subject to all claims (other than tort claims) and defenses arising out of any transaction in which the credit card is used as a method of payment or extension of credit.


Most credit card agreements give consumers the right to arbitrate any dispute with their creditor. By asserting arbitration as a “defense” in the lawsuit, a consumer forces a creditor into the awkward position of having to put on its case in an unfamiliar and costly setting, which may result in the case stalling out, being dismissed, or a settlement being reached.


There is no silver bullet or one size fits all approach when it comes to defending any given creditor. The result of any credit card defense case may turn on the lawyer who knows the law, rules of procedure, rules of evidence, and the facts of the particular case better than his opponent does.

Call for a Consultation

If you have been served with a complaint stemming from a consumer debt, contact Miami business lawyer Andrew J. Pascale today for a consultation. In most instances, you only have 20 days or less to respond to this type of lawsuit. Let Mr. Pascale’s experience in representing hundreds of consumer and credit card defense clients like you guide you toward a resolution.

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