Most people would probably respond “no.” The statute of limitation to sue for a debt is generally 4 years in California. [California Code of Civil Procedure Sec. 337] But what does that mean, exactly? The statute of limitation is the period in which a lawsuit can be filed. In other words, if Joe owes $5,000 to Greedy National Bank, and he quits making his monthly payment, Greedy has 4 years in which to file a lawsuit, or they will lose their right to sue – meaning that the debt cannot be legally collected. The 4 years starts with the latter of when Joe either made the last charge or the last payment on the account.
What bill collectors sometimes do, in an attempt to extend the limitation period, is to record a non-existent payment on the account. Using the above example, let’s say that Joe’s last payment to Greedy was on July 1, 2019. That means that the 4 year statute of limitation expired on July 1, 2023, so Greedy has lost its right to sue. But let’s say that Greedy has a ledger showing that Joe actually made another payment, out of the blue, on August 1, 2021. This means that Greedy now has until August 1, 2025 to file a suit!
However, Joe maintains that he did not make any payment after July 1, 2019. Who is to be believed? If Greedy actually filed a suit sometime after July 1, 2023, then it would be up to the trier of fact (meaning a judge, or if requested by either side, a jury) to decide whether in fact Joe really made the later payment or not. Our experience in such cases has been that bill collectors usually do not file suit if their payment record is challenged – unless they can produce good evidence of the later payment.
Now, what about the 40 year old debt mentioned earlier? It’s obviously barred by the statute of limitation, right? Well not too long ago, we had a client with a creditor who was attempting to collect a debt that was at least 40 years old. And the Creditor had actually managed to seize some funds from our client’s bank account. The difference was that this creditor had already obtained a judgment against our client. Thus, the 4 year statute of limitation no longer applied, since a lawsuit had been filed within the limitation period. A judgment is good for 10 years in California. However, the judgment can be renewed, prior to its expiration for an additional 10 year period. [Code of Civil Procedure Sec. 683.110(b)]. There is no limit on the number of times that a judgment can be renewed.