Bank of America Stuck in Debt Collection Dispute with Client

 Posted on October 24,2017 in Bank Collections

Illinois trial and appellate courts have been going back and forth on a debt collection case between Bank of America and a small business owner. Bank of America is suing the former owner of All About Drapes for the remaining value of an unpaid loan, plus interest and legal fees. The business owner counters that he was induced into signing the loan agreement because the bank falsely claimed that his previous line of credit was expiring. The trial court has twice ruled in favor of Bank of America in a summary judgment, but the appellate court overturned that decision each time.

Case Details

The business owner had originally created an open-ended line of credit with LaSalle Bank. He would borrow money to help him through the winter months — when his business was slow — and paid the bank back at a two percent interest rate. Bank of America purchased LaSalle Bank in 2008, and the business owner began seeing an August 2009 maturity date on his bills. The owner explained to multiple employees at the bank that his line of credit did not have a maturity date. The bank insisted that:

• It had documentation that proved the maturity date; and
• The business owner must repay his entire debt by the date or face a lawsuit.

As an alternative, the bank offered him a new agreement that extended his loan for another year. The business owner signed the agreement in July 2009, but the bank filed a complaint against the business owner for missing loan payments in February and March of 2010. Unable to afford the payments, he was forced to sell his business.

Determining Fraud

Bank of America admits that it was mistaken in claiming that the initial line of credit had a maturity date. The business owner claims that the loan agreement is invalid because he signed it under fraudulent circumstances. The trial court has consistently dismissed the business owner’s arguments because:

• Perpetrating fraud requires deceiving the victim;
• The business owner signed the loan agreement despite not believing the bank’s claim that his initial line of credit was expiring; and
• The business owner could have refused to sign the loan agreement and taken the bank to court.

In allowing a summary judgment, the trial court indicated that it is a material fact that the business owner is liable for the debt. However, the appellate court has twice disagreed, saying that the interpretation of the facts can be disputed and the case deserves a full trial. The appellate court stated that the bank falsely claimed it had supporting documents and threatened legal action, which may have compelled the business owner to sign the agreement.

Making Errors

Bank of America claims that there were no fraudulent intentions in mistakenly telling its client that his line of credit was expiring. Such confusion can happen when a bank is absorbing clients from another bank it has purchased. However, failing to recognize the error has made the bank vulnerable to fraud accusations. A Chicago debt collection attorney at Dimand Walinski Law Offices, P.C., can check your legal standing before taking action against debtors. To schedule a consultation, call 312-704-0771.

Source:

http://www.illinoiscourts.gov/R23_Orders/AppellateCourt/2017/1stDistrict/1162849_R23.pdf