Statute of Limitations for Payment Collections

prabbit1.DeleteThis@shamrocksgf.com wrote:

> Not a lawyer and it would definitely depend on the laws of the
> state your in but my guess is that it actually started at the time
> the contract was signed and not when the job actually ended. But
> I'm willing to bet it didn't start when the invoice was sent
> (barring any wording to the contrary in the contract itself) since
> all that did was remind the person of the debt already incurred.
> But various things could have either "tolled" (paused) or even
> restarted it (see below.)

Generally the statute of limitations period will start to run when
you could have sued someone for the debt. If a debt isn't legally
payable until after submitting an invoice (or 30 days after that),
I'd think the time period would start to run at that time.

> I do believe you are wrong here. The SOL generally starts running
> at the time the contract was entered into.

So what about contracts that extend for, say, five years? The
limitations period would extinguish the claim before the contract is
even completed. That makes no sense at all.

The limitations period runs from the date of breach. The one
possible exception I can think of (and it doesn't apply everywhere)
is a loan made on a demand note. The lender can call the loan at any
time. So the period runs from the signing of the note. But if there
is a due date, it doesn't start to run until the due date has passed.

Stu
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In misc.legal.moderated Stuart A. Bronstein <spamtrap DeleteThis @lexregia.com> wrote:
> prabbit1 DeleteThis @shamrocksgf.com wrote:

>> Not a lawyer and it would definitely depend on the laws of the
>> state your in but my guess is that it actually started at the time
>> the contract was signed and not when the job actually ended. But
>> I'm willing to bet it didn't start when the invoice was sent
>> (barring any wording to the contrary in the contract itself) since
>> all that did was remind the person of the debt already incurred.
>> But various things could have either "tolled" (paused) or even
>> restarted it (see below.)

> Generally the statute of limitations period will start to run when
> you could have sued someone for the debt. If a debt isn't legally
> payable until after submitting an invoice (or 30 days after that),
> I'd think the time period would start to run at that time.

Yes, if the I had no way of knowing the amount due till the invoice was
prepared and sent (such as if I went into the hospital, I'd have no way to
know the exact charges due till after all billing was finished,) then that
would probably start the time. But if I entered a contract that required me
to pay $1,000 then I'd know the amount due even if no invoice was ever sent.

>> I do believe you are wrong here. The SOL generally starts running
>> at the time the contract was entered into.

> So what about contracts that extend for, say, five years? The
> limitations period would extinguish the claim before the contract is
> even completed. That makes no sense at all.

The time can start at the time the contract is entered into and then be
paused due to the contract taking a period of time to actually be enacted.
I.e. if you enter a contract to buy a car, each payment can reset the time
period or it can be paused until a payment has been in default.

> The limitations period runs from the date of breach.

And that's basically what I had said in the part that you cut out; that
payments can reset/restart the time period.

The one
> possible exception I can think of (and it doesn't apply everywhere)
> is a loan made on a demand note. The lender can call the loan at any
> time. So the period runs from the signing of the note. But if there
> is a due date, it doesn't start to run until the due date has passed.

And having a due date in the contract (or any other reason why the money
isn't due at the time the contract was entered into) simply would be saying
that both parties agree that the SOL is voluntarily tolled until that due
date. If you and I entered into a contract and the due date was 01/01/1990
and I defaulted on 02/01/1990, we could agree on 01/01/2006 that you can
then sue me and thus mutually and voluntarily waive the SOL (or mutually
agree that it's restarted at that time or any other time.) I believe that's
all that having a due date does is shows that we both agreed to toll the SOL
until that due date (or the law may explicitely say the SOL is tolled until
the due date, if it's at a later date.)

> Stu


--
Mike

-------------------------------
"Our enemies are innovative and resourceful, and so are we. They never stop
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we," George W. "Shrub" Bush Aug 5, 2004
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Barry Gold wrote:
> tobe <ybotkaSPM.DeleteThis@cinci.rr.com> wrote:

> ALl the above is correct, except IIRC the part about credit reports.
> Debts on which the SoL has expired are not supposed to be reported to
> CRAs and should be removed. If they don't, the consumer may have
> cause to sue for "slander of credit".

Is this also true for debt that was supposed to be discharged by
bankruptcy? My husband filed bankruptcy about 3 years ago and still has
on his credit report "open collections" that should have been
closed/cleared by the bankruptcy. Do we need to go back to our lawyer
for assistance with this?
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"marcia" <design1 DeleteThis @insight.rr.com> wrote:
> Barry Gold wrote:
>> tobe <ybotkaSPM DeleteThis @cinci.rr.com> wrote:
>
>> ALl the above is correct, except IIRC the part about credit
>> reports. Debts on which the SoL has expired are not supposed to
>> be reported to CRAs and should be removed. If they don't, the
>> consumer may have cause to sue for "slander of credit".
>
> Is this also true for debt that was supposed to be discharged by
> bankruptcy? My husband filed bankruptcy about 3 years ago and
> still has on his credit report "open collections" that should have
> been closed/cleared by the bankruptcy. Do we need to go back to
> our lawyer for assistance with this?

As Mikc said, the statute of limitations is independent from a credit
report. Neither bankruptcy nor the statute of limitations wipe out the
debt - they only eliminate the ability to enforce it. You can probably
have the credit reporting agency add, "discharged in bankruptcy" but
otherwise it's probably ok to do what they're doing.

Stu
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>Barry Gold wrote:
>> ALl the above is correct, except IIRC the part about credit reports.
>> Debts on which the SoL has expired are not supposed to be reported to
>> CRAs and should be removed. If they don't, the consumer may have
>> cause to sue for "slander of credit".

marcia <design1 DeleteThis @insight.rr.com> wrote:
>Is this also true for debt that was supposed to be discharged by
>bankruptcy? My husband filed bankruptcy about 3 years ago and still has
>on his credit report "open collections" that should have been
>closed/cleared by the bankruptcy. Do we need to go back to our lawyer
>for assistance with this?

It's definitely true for bankruptcy even if it's not true for the
Statute of Limitations. Once the debt has been discharged in
bankruptcy, it is no longer a debt. Of course, the BK will stay on
your husband's credit report for 10 years, but he should be able to
get the "open collections" cleared off.

He could go back to his lawyer, but he could first try something
easier: write the credit reporting agencies and dispute the reports.
They have to investigate, which in practice means they contact the
people who placed the reports to see if they still stand behind them.

If the collection agencies responsible for those reports are following
the law, they will tell the CRA that they are no longer valid, and
they should disappear from your husband's credit report.

If they don't, your husband can
a) write the collections agencies yourself and demand that they remove
them,
b) pay his lawyer to write essentially the same letter.

The lawyer will probably charge for writing the letter, but a letter
from a lawyer is generally more convincing than one from a "mere"
consumer.
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