How to Defeat the “Account Stated” Claim in Your Arizona Midland Funding Lawsuit

When junk debt buyers like Midland Funding file a lawsuit they often don’t have the evidence and documents they need to prove that you had a contract with the original creditor.  Because of this they will often not only sue you on a breach of contract claim but may sue you for what is known as an “account stated”.

In this article I will discuss what an “account stated” claim is and ways that you can defeat it using Arizona law.

What is an “Account Stated”

An Account Stated is where the parties come to an agreement as to an amount owed.  There must be some evidence of a relationship between the parties that is often formed by looking at the past transactions between the parties.

For example, if two people had a history of one person loaning money to the other and the other repaying that loan there could be an inference that there was an agreement between the parties even though there was no written contract.  Further, if those parties then entered into a settlement as to what was actually owed that would constitute an “Account Stated’.

Why Would a Junk Debt Buyer Like Midland Funding Use an Account Stated Claim?

The reason why an account stated is often alleged as a claim in the lawsuit is because it is easier to prove in court.  Under the account stated theory they don’t need to provide the original contract or prove what specific terms of the contract are, they can just look to the prior history between the parties – which in a junk debt buyer lawsuit is often the monthly statements.

You Likely Have a Statute of Limitations Defense in Arizona

If you are fighting your lawsuit in Arizona there is a good chance that you have a statute of limitations defense to an account stated claim.

Under Arizona law there is a three (3) years statute of limitations on account stated claims – as opposed to a six year statute of limitations on written contracts.

The statute of limitations typically starts to run when the account goes into default – which, with credit cards is usually thirty days after the last payment.  If it has been more than three years since a payment was made there is a strong argument that junk debt buyer waited too long to bring an account stated claim and it must be dismissed.

A good strategy would be to file a motion for summary judgment against the junk debt buyer on its account stated claim – get that thrown out – and then require that they prove in detail their claim for breach of contract, which will be much more difficult to do.