New York City Debt Collection Defense Attorney

CACH, LLC Unable to Pin Liability on Individual for Business Credit Card

When it comes to debt collection, CACH, LLC is known for pursuing overdue personal debts. However, their reach extends to business-related debts as well. A recent case, however, highlights the complexities when businesses and personal liability intersect.

The Heart of the Matter: Personal Liability for Corporate Debt

In a notable decision, the court rejected CACH, LLC's attempt to hold Mr. Kugelman personally liable for a corporate credit card debt. The crux of the issue was the lack of concrete proof tying him to the business's financial obligations.

Demystifying "Account Stated"

For those unfamiliar, "account stated" is a legal concept often invoked in these situations. It implies that a person agrees to the balance due by not disputing account statements. Credit card companies and debt collectors frequently use this argument to establish a debt trail and hold individuals responsible.

Account Stated Law in Collection Practice by JessAccount Stated Law in Collection Practice by Jesse Langele Langel

A Court’s Skeptical Eye

However, "not so fast," said the court. It emphasized that the "account stated" argument can only be used if there's an existing agreement between the debtor and the creditor. Simply not disputing statements isn't enough to prove an agreement, especially when other explanations could exist. Not so fast, holds the court. Without evidence that Kugelman agreed to be personally liable, CACH was not permitted to use the account-stated theory as an independent basis of liability. In other words, an account-stated theory may only be used after a debtor-creditor relationship is established. Moreover, a failure to object to statements only raises a presumption of assent. And like any other presumption, it may be rebutted by circumstances supporting a different inference.

The Missing Link: A Binding Agreement

CACH, LLC’s case faltered because it couldn't show any agreement where Mr. Kugelman accepted personal responsibility for the debt. Even an FIA Card Services affidavit that named him the account opener wasn't sufficient. The court looked for but did not find, any direct evidence, such as a signed contract. Banks and collection lawyers often successfully argue that credit-card statements establish the “series” of transactions and that a debtor’s failure to object to the most recent statement implies that the outstanding balance is established as the “account stated.”

In this case, CACH’s failure to produce any contract or guarantee implicating Kugelman’s personal liability wiped out its account-stated theory. The court was apparently not persuaded by FIA’s Card Services’ affidavit mentioning Kugelman as having opened the account. The court instead pointed to CACH’s lack of business records or documents proving Kugelman’s liability “either primarily or by guarantee.”

A Victory for Clarity in Debt Liability

This outcome is a victory for individuals who fear being unjustly saddled with corporate debts. It underlines the need for clear, documented agreements when assigning personal liability for business financial obligations.

We're Here to Help

If CACH, LLC has contacted you or you're facing similar challenges with corporate credit card debts, reach out to us. Understanding your legal position is the first step in defending your rights. Our team can help clarify your situation and explore your options.

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