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What happens when a bank cannot produce a copy of their credit card agreement during a lawsuit for an unpaid account balance?  Well, that was exactly the situation when CitiBank sued Teresa Cooper in the Superior Court of Vermont, and that case typifies the current status of credit card lawsuits nationwide.  Banks cannot seem to produce a copy of their contracts when litigating unpaid accounts.
What CitiBank was able to provide the court was a copy of the monthly billing statements mailed to its customer and the bank sought to recover a summary judgment on the legal theory of Account Stated.  In short, the account was stated month to month via the billing statements, no objections were made by the borrower, so the balance must be true.
Amazingly, credit card companies have tremendous difficulties producing a copy of the written contract. This is because the contract is not contained in one document but is a result of several documents, perhaps dozens or hundreds of documents, generated during the time the account exists that must be read together to come up with the terms of the agreement. 
Oh, what a tangled web we weave. When first we practice to deceive!
In an effort to generate higher profits, banks created flexible contract documents that could be amended or supplemented at any time by simply mailing a notice of changes to interest rates, late fees, over-limit fees, cash advance fees, credit score fees, etc.  So, to figure out what the bank should have charged in any one month, dozens or perhaps hundreds of documents must be reviewed to determine what terms applied from one month to the next.  Of course, the problem is that the banks have failed to create a single depository of all these documents unique to each customer, and the banks themselves struggle to produce the full set of contract documents, let alone to explain how the contacts actually operate in a court of law. 
Well, not really a big deal, right?  I mean, you were mailed a statement of the then current contract terms and you didn’t object, so what’s all the fuss?
At least in the State of Vermont, this is a big fuss.  The court stated that in none of their prior cases had they applied the doctrine of Account Stated to a distantly located bank or other financial institution where no personal relationship existed.   The classic example of a running account is between a farmer and the local supply store, but that hardly resembles the modern relationship between a distant bank and its borrowers.  The court found that the borrower did not, unlike the farmer and his supplier, agree to the amount of the debt. 

“Even if there are situation in which this position (failing to contest the accuracy of a bill) may have merit, it is without merit in credit card transactions because it is based on the assumption that the recipient, upon review of an invoice, can readily determine whether this is an amount he or she owes . . .This assumption does not hold true with credit card agreements and transactions.  Credit card statements often contain multiple interest rates, interest rates which fluctuate from billing period to billing period, and a myriad of other kinds of fees and penalties.”

The court further stated that “[w]hile the credit cardholder, looking at the statement, can see the amount of the charges that were imposed, he or she is unlikely to know whether the charges are consistent with the writings governing the cardholders obligations . . . [T]he Court does not agree that Ms. Cooper’s silence was tantamount to assent to the accuracy of the monthly statements.”

The Court does not agree that Ms. Cooper's silence was tantamount to assent"

In the absence of providing the court with a complete copy of the credit card contract, the court denied all interest and finance charges and limited recovery to the principal borrowed minus the payments made on the account.
The Vermont court nailed the issue:  Silence is not assent.  Failure to protest the accuracy of a credit card statement is not the same thing as agreement to the charges.  Consumers are simply not able to measure the accuracy of the monthly finance charges.  Without producing the credit card agreement  banks should never recover more that the principal amount borrowed.
 
 
 
 

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Minnesota Attorney General Lori Swanson has filed a lawsuit against a junk-debt buyer, Bradstreet & Associates, accusing that firm of charging an inflated interest of 22% on debts for overdrawn bank accounts that may only charge 6% interest under Minnesota law. 

Companies have the right to collect legitimate debt.  But they shouldn't be charging peoeple for interest they don't owe."  Minnesota Attorney General Lori Swanson

Bradstreet & Associates spent $646,000 to purchase $9 million of overdrawn bank accounts from U.S. Bank and Wells Fargo.  The accounts were purchased from a Florida debt buyer for 3 to 7 cents on the dollar.
Bradstreet filed lawsuits in Minnesota misrepresenting the maximum interest rate that could be charged for these debts and in most cases obtained default judgments when consummers failed to respond to the lawsuit.
How did Bradstreet & Associates decide to charge 22% interest instead of the legal maximum of 6%?  The company has refused to comment on the lawsuit so we can only speculate.
There is an attitude prevalent in the civil court system that the accounts of banks and debt buyers are generally correct that that if a person is sued for the debt they probably owe the debt.  A frequent statement made by debt collection lawyers is that the only issue at hand is whether the debt is owed or not. 
Increasingly debt collectors are turning to the legal theory of Account Stated and file lawsuits without any real proof of the debt owed but rather under the theory that the account was stated in a monthly billing statement and no objection was made by the debtor, so the debt must be owed.  Debt collectors argue that the court does not need to examine the underlying contract with the bank and that the court should issue a judgment based solely on the fact that the debtor has not objected to the billing statements.
Courts should never allow debt collectors to obtain judgments under Account Stated theories when an express written contract exists but is not presented to the court.  The billing statements of banks are frequently incorrect, and statements of debt buyers are especially questionable as the Minnesota Attorney General has revealed.
What can we take away from this?

• Billing Statements of Debt Collectors are not reliable and should not be used as a substitute for the underlying contract between a bank and its customers.
• When sued by a debt collector a person should always file a written answer to avoid a default judgment.
• Debtors can win against debt collectors if they demand proof of the debt.

Walk out of bankruptcy debt-free? Maybe, but if you don’t pay the mortgage then you’ll still lose the house.
When you take out a loan to buy real estate, the bank takes a lien out on the property. Fail to pay the mortgage and the bank will foreclose on the lien to take back the property.
That lien is called a mortgage, and it’s a document that’s filed in the same place where the deed is filed. It differs from the promissory note, which is the promise to repay the money.
Related: Liens Explained
Fail to pay the money, and the bank uses the mortgage to foreclose.

The Effect Of Bankruptcy On A Mortgage
If you file for Chapter 7 bankruptcy, you will discharge your personal liability for repayment of the promissory note. A failure to pay the bank after your discharge will lead to a foreclosure, but the bank won’t be able to sue you for the deficiency if your state law allows for one (California doesn’t allow for deficiency judgments after foreclosure).
In the case of a Chapter 13 bankruptcy, the end of the case cures any mortgage arrears but doesn’t necessarily wipe out your obligation to pay after the case is over.
Related:

• Chapter 7 Bankruptcy
• Chapter 13 Bankruptcy

What The Lender Gets After Bankruptcy
The bankruptcy discharge wipes out your personal liability under the Promissory Note.
After the bankruptcy discharge, the creditor with a lien can exercise its rights to foreclose if you don’t pay.
So the lender gets the house, but not a hand in your pocket.
Keep Paying If You Want To Keep The House
If you don’t pay the mortgage, the bank will foreclose. So if you want to keep the house, keep paying.
If not, then you can let it go after your Chapter 7 bankruptcy case.
If you’ve gone through a Chapter 13 bankruptcy, the best bet is to provide for the surrender of your interest in the property through your Chapter 13 Plan.
Either way, it’s important to know that liability for a deficiency – which doesn’t exist in California anyway – differs from keeping your home.
The discharge doesn’t prevent foreclosure.