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Answers to Collection Questions from
Members of the California Collectors Association

"The Defense of the Attorney Judgment—Tactical Immunity Defense"

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Often, I receive questions which are outside of the traditional areas I write about in my Tales From The Frontline articles, which are in the areas of collection agency defense under the FDCPA and state laws. Recently, we received an inquiry from an ACA member, to whom we have provided a written response. Because I believe the answers to these questions would be of general interest to the CAC membership, I am publishing the questions and answers here. Either I, or one of my staff of attorneys who work with me in Sacramento, are available to answer questions from CAC members.

Question: If an account is barred by the statute of limitations (over four years old) and we receive a payment on it, will the payment activity bring the account back into statute?

Answer: Generally, no.

A debt or obligation barred by the running of the statute of limitations is unenforceable, but the discharge or satisfaction of the “moral obligation” which remains is viewed as sufficient new consideration for a new promise to pay, giving rise to a new, enforceable promise to pay, distinct from the old unenforceable obligation. General Credit Corp. v. Pichel (1975) 44 Cal.App.3d 844, 848; 1 Witkin, Summary of California Law: Contracts (9th ed. 2001), p. 246, §242. Thus, absent some writing signed by the party to be charged thereby, payment, in and of itself, will not revive a cause of action which is time barred. Civil Code § 360; Clunin v. First Federal Trust Co. (1922) 189 Cal. 248, 249; see also Witkin, supra, at 246, § 242.

However, if the obligation sued upon constitutes an open book account, the statute of limitations begins to run from the date of the last entry on the account. Code of Civil Procedure § 337(2). But an open book account becomes closed, and the statute of limitations begins to run, once the account creditor ceases to extend credit on the account and there is no further activity on the account other than payment being made. RNC, Inc. v. Tsegeletos (1991) 231 Cal.App.3d 967, 972.

If the underlying account is the collection of a student loan, it is not subject to the above restriction since the obligation is not subject to a statute of limitations. 20 USC § 1091a(a); U.S. v. Phillips (9th Cir. 1994) 20 F.3d 1005, 1007.

Additionally, if the underlying account is based upon a negotiable promissory note, it must be enforced within 6 years of the instrument’s due date. Commercial Code § 3118.

Question: If a spouse incurs a debt in California with his or her signature only, can we go after the other spouse in collection?

Answer: Generally no; but it depends upon the nature of the debt and the character of the funds sought.

Except as otherwise expressly provided by statute, the community property is liable for a debt incurred by either spouse before or during marriage, regardless of whether one or both spouses are parties to the debt. Family Code § 910(a) However, a spouse may not be joined as a defendant in the collection action solely to facilitate enforcement against the community property. 11601 Wilshire Associates v. Grebow (1998) 64 Cal.App.4th 453, 455.

A spouse’s separate property is not liable for the debts incurred by the other spouse before or during marriage, except as expressly provided by statute. Family Code § 913(b). One such exception is a debt incurred for the other spouse’s necessities of life. Family Code § 914(a).

This article is not to be considered legal advice by the author or Ellis Law Group, LLP. Any person or agency with specific legal questions must consult with the legal counsel of their choice.

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