Credit Card Debts

    Credit Card claims are handled by either small claims or District Court action based upon the amount in dispute. Iowa Code Chapter 537 covers the ICCC requirements for consumer credit transactions in Iowa.

    Capital One Bank v. Denboer v. Kelly, 791 N.W. 2d 264 (Iowa App. 2010) covers the requirements that a credit card creditor must prove to win a default judgment in court. Arguably, these same requirements should be required to win a contested case also.

    These requirements are procedurally listed in Iowa Code section 537.5114 to make a prima facie case.  To recover a credit card debt from a consumer according to Denboer, the creditor must either:

         1. Meet the requirements of the common law account stated by:

              a. Provide an account agreement with the consumer

              b. A final or "charge-off" statement with the consumer's address

              c. A sworn statement from a person with knowledge that:

                  i. regular monthly account statements were sent to the consumer at the address provided by the consumer

                 ii. The Charge-off statement is the sum total of the statements

                iii. The consumer used the credit card

                iv. The consumer never objected to the monthly statements, or a sworn statement detailing the objections                          and demonstrating that the objections were resolved without further objection by the consumer, or a                               statement establishing that during the last 90 days before the charge-off statement (or longer period of                           time leading up to the charge-off statement) that the consumer used the credit card and made no                                     objections during that time.

OR

          2. Provide an itemization of the debt that the creditor is seeking to recover by:

              a. Filing an account agreement with the customer

              b. Filing a transaction history ending at a recent charge-off statement

              c. Provide sworn statement from a person with knowledge authenticating these two items.

              d. In this case, the creditor is limited to recovering any increase in debt shown on the transaction history plus                       ongoing interest.

     The creditor need not provide the required information in the filings but may provide the required information later on, as long as the information is provided before judgment is entered. ITT Fin. Servs.v. Zimmerman, 464 N.W.2d 486, 489 (Iowa Ct. App. 1990).

      Additionally, the creditor must comply with Iowa Code sectios 537.5110 and .5111 (cure of default and notice of right to cure).

      Debtors should ensure that they provide an Answer denying that they owe the debt or face a default judgment if they do not provide an Answer within 20 days of service. The denial is important in these types of cases, as often the debt has been bought and sold and the creditor may not have all the necessary information to win a judgment. Often, the last creditor receives only basic information concerning the account, and must pay the original creditor to receive necessary documents. The latest creditor often does not pay to receive the documents and files a lawsuit that may not withstand scrutiny of the court. However, if the debtor does not answer and fight the debt, the creditor wins a default judgment. The creditors realize this problem, but go with the percentages as to the number of people who do not fight and lose to default. Once the judgment is issued, then the debtor has lost his day in court to fight the case (in most cases except on appeal).

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