Likelihood of Lawsuit?

[Anonymous]

I went delinquent on a credit card in 2004.  Balance after not making a payment since April 2005 is close to $17,000.  The debt was sold to a CA early in 2007.  They were less than interested in negotiating a settlement.  Late last month I received a letter from a law firm on behalf of the CA.  I am not posting their name publicly because I think they probably do check online for these sorts of things (send me a PM if you want their name).  Anyway, the SOL in my state expires in six months.  I am sending a DV letter to the attorney today.  Does anyone think they will validate (their method not what I am requesting) the debt and possibly file suit before the SOL expires in April?  Suggestions for dragging it out and stalling their ability to continue with collection activity before SOL expires?

One other item of note, a relative at an address I have not lived at in a few years recently had a phone message left there about the debt from the attorney's office.

Message Edited by SDDave on 10-27-2008 04:24 PM

[llecs]

I've seen it all here even with suits being filed up to the last month. I would check with your statutes in your state to see if a payment will reset the SOL. There's always that chance that it may not.

If you are sending a DV to the attorney, then send one to the CA too. Doing this will wake up a CA, but sounds like they have insomnia. But take note, some states don't consider attorneys as CAs thus a DV may or may not apply to them.

Also look for some legal remedies. Look to see if the attorney is an "attorney". Check with your state or their state bar association. Also check out any licensing requirments for your state and the CA's state.

And tell the relative to keep an eye out for any legal documents. It could be that the attorney is fishing around for a place to serve you. Oh, and last point. Worst case scenario, check with your court to see if your info is in the court's records. Your info could already be in there before they serve you.

[Anonymous]

This is in California so there are no licensing requirements AFAIK.  The attorneys are registered with the state bar.  My research on SOL in CA is that a payment resets the SOL on an open account.  My last payment was 4/05 and my recollection is that the account was already closed at the time, so its quite possible my SOL ends sooner than 4/09 possibly as soon as next month.  Not sure exactly when the account was closed by the OC.  I told my relative to simply answer wrong number to anyone asking for me on her landline if she picks up, and to refuse service on any legal documents. It's a different state entirely so good luck to them there.

[Anonymous]

Proper service, AFAIK, has never, ever depended on the person being served (whether the respondent OR a "proxy" -- i.e., family member, co-worker, etc) "accepting" the service. If it did, no one would EVER be served!

In fact, I've heard oodles of horror stories involving a PS just tossing the summons on the ground in front of the subject and it being legally binding as "proper service" -- even if the PS doesn't actually SEE the subject pick the summons up or touch it in any way.

CA law allows the server to either adhere to the CA Civil Procedural Codes or the foreign state's CPC. And many states allow a summons to be served via the USPS (excluding PO Boxes, of course).

CA also allows service to occur simply at your dwelling, or place of work. They can even mail the summons (again, using the USPS) to your boss, your work office or your home address -- or your Aunt Matilda's home, if they have reason to believe that you spend enough time there that you're likely to be located there.

Also, I didn't see anything in the CA Civil Codes that reference the specifity of payment only reseting the SoL on an open-ended account (as that is what a credit card account is usually considered) that is open (not closed).

Is it possible that you're confusing the "open" in "open-ended accounts" with the STATUS of being "open" (vs. being closed, transferred, etc)?

[Anonymous]

Wonderin, given that the relative in question lives 3,000 miles away, I believe mailing a summons to her address would be somewhat difficult to use for a CA lawsuit.  That said, I have confirmed that the OC closed the account to new charges in December 2004, which means the SOL is expiring shortly.  The payment I made in April 2005 was made after the account was closed and did not reinstate it in any fashion nor did it reset the SOL.  I sent my DV letter two days ago.  Hopefully it will stall the law firm long enough from doing anything in the short time they have remaining.

[Anonymous]

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@Anonymous wrote:

Wonderin, given that the relative in question lives 3,000 miles away, I believe mailing a summons to her address would be somewhat difficult to use for a CA lawsuit.

Not true. CA allows "foreign" or interstate service. There is absolutely no limit in distance.

I've heard oodles of stories citing where a summons to appear/answer was delivered to an opposite coast. It can happen.

The suit would still be filed in CA, you would simply be expected to either travel to CA (since I can only assume that THEY assume that you are not in CA, if they'd actually mail the summons to another state) or that you would be expected to domesticate the case. 

That said, I have confirmed that the OC closed the account to new charges in December 2004, which means the SOL is expiring shortly. The payment I made in April 2005 was made after the account was closed and did not reinstate it in any fashion nor did it reset the SOL.

The "status" of the account, closed, open, etc, has absolutely no bearing on SoL. The only thing that has any bearing on SoL is the date of the last action (specifically, the date of your last payment).

So even if the account was closed the day after you missed your payment (we'll say 08/05), and your SoL (pulling a number out of the air) was 4 years, the SoL does not expire until 08/09. However, if you make a payment on the account on 08/08, you've just reset the clock and the SoL expires now in 08/13.

Reinstatement of the account, or any other account status has absolutely no bearing, legally, on SoL. None. What matters is simply when the last date of your payment is.

I sent my DV letter two days ago. Hopefully it will stall the law firm long enough from doing anything in the short time they have remaining.

Hopefully, yes. But if they've already filed, the DV is useless and you will have to (when you receive your service) answer with a "demand for production" (basically, demanding proof of the debt -- much like "discovery"). 

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[Anonymous]

I disagree regarding SOL:

"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."

A credit card is an open account until credit privileges are revoked, which they were in December 2004 at which point it becomes a closed account.  Payments made after that point do not reset SOL based on the precedent in the case cited above.  If you believe otherwise feel free to point out where I may be wrong here.  Obviously the payment in 05 was a mistake on my part in hindsight, but I wasn't thinking about SOL at that point, and well quite honestly given where I lived at the time, wouldn't have changed anything as it was 6 years from date of delinquency.

Message Edited by SDDave on 10-29-2008 09:38 PM

[Anonymous]

Okay, I did some nosing about at Lexis. RNC, Inc. v. Tsegeletos, while quoted ALL over the web (mostly forums like this one), its not a popular cite. At least, there's not much discussion on the topic by the pros.

I did find this blurb:
"Thus, the court held, "In most of the states a partial payment upon an account tolls the statute. The rule is otherwise in this state, because of section 360 of the Code of Civil Procedure requiring a written acknowledgment, but it is a reasonable construction of the legislation fixing a different period of limitation upon an 'open book account' from an ordinary account to hold that the payment made and entered upon the open book account tolls the statute."

So, really, it's still up for interpretation (which is no biggie, since ALL laws are subject to a judge's interpretation -- precedents only give guidance to the sitting judge).

Personally, I wouldn't stop there ... if you end up going to court (because of course, even though the SoL has expired, you MUST still appear if summoned, obviously), I would cite a few more cases:

Purdy v. Maree, supra, 31 Cal.App.2d 127,and to a lesser degree, Carter v. Canty (1919) 181 Cal. 749 [186 P. 346]

The more supporting cites you have, obviously, the better!!! 

[Anonymous]

Thanks for looking into it.  My legal research materials cover a very narrow area of law and don't include contract law.  It's not a slam dunk but I think there's a good legal argument to make.  It may also come down to a judge's opinion regarding what an open book account is.  The blurb you posted references tolling the statute on an open book account.  I don't disagree with that.  I also don't find it fundamentally inconsistent with the quote from RNC, Inc v Tsegeletos, CCP 337(2) or how it applies to my situation.  If a credit card account revokes charging privileges on a credit card, it becomes a closed book.  

Worst part is, back when that small payment was made, I had a 35% settlement offer from the OC, which I would have taken if I had the ability to do it.  Two years later, the CA buys the debt and wouldn't discuss anything less than 100% of the outstanding balance which had doubled due to a 28% interest rate.  Ugh. In any event, I'm keeping my fingers crossed.  Once I am certain I am past the last possible SOL date then maybe I'll offer a PFD.  It's the only negative on my credit at this point.

Thanks for your help. 

[Anonymous]

Collector agencies can add some fees, but State regulations govern what kind of interest they can charge on junk debt - I suspect in many states the interest to be none or much less than 28%.