Promissory Note Statue of Limitations

[HRZ]

Plus in my lay view you have big problems with a supposed oral modification of a written note the performance of which spans more than one year --no I did not look it up.. but the statute of frauds may put ice water on an oral modification

 

[latigo]

Admitting partial payment was made prior to the expiration date and that it never met or maintained the terms of the note. I have a receipt form we would both sign and state the amount of payment. Proves that months after we entered into the note the average payment was not maintained and that payments resumed years later. The note stated if the payments fell below an average amount that an interest penalty would be applied. That to me is a cause of action starting the SOL and supporting my case for when it began.

What event triggers the so-called "interest penalty" has nothing whatsoever to do with the issue. That issue is whether or not your partial payment served to toll or suspend the running of the 6-year statute of limitations and constituted an acknowledgement of the debt.

Here you admit that the payment was made within the 6-year period and that it was expressly acknowledge in writing by both you and the holder of the note clearly, distinctly and unequivocally identifying the debt and the purpose of the payment as a credit to the debt.

Under these circumstances even if the statute had expired, such would or could serve to revive the debt. That is, an unequivocally admission/acknowledgement of a time-barred debt (in writing as per the receipt) and implying a new promise.

In sum this specious argument of yours that ONLY THOSE payments as expressly provided by the note; to-wit: "an average payment maintained, blah, blah, blah . . ." can serve to toll or suspend the running of the statute is pure sophistry and will, as it did at in the trial court, fall on deaf ears!

Plus, if applicable, increase what you will be taxed as payment of the plaintiff/appellee's attorney fees!

 

[Dassault5209]

When you started making payments doesn't count. It's when you stopped making payments that counts.

You were not in default as long as you made payments and the lender accepted them.

You defaulted in 2015 and you were sued in 2017, well within the statute of limitations.

My guess: You will lose the appeal.

The note says that in the “event of non-payment or the monthly average falls below $250 that 5% interest will be added to the balance.” Doesn’t that show that to be a type of default on the loan that interest is racked on? And any payment after a breach that doesn’t meet the terms falls in line with a non-performance loan. I’m just looking at partial payment or not the terms were not maintained therefore a breach occurred.

 

[justalayman]

The note says that in the “event of non-payment or the monthly average falls below $250 that 5% interest will be added to the balance.” Doesn’t that show that to be a type of default on the loan that interest is racked on? And any payment after a breach that doesn’t meet the terms falls in line with a non-performance loan. I’m just looking at partial payment or not the terms were not maintained therefore a breach occurred.

No. It actually provides for a situation where you failed to make payments or payments not meeting the written obligation. It doesn’t mean you have a default such as needed to start the clock.
Since the payment was to be an average, any payment is a payment. In other words, there is no set payment required only a penalty that would be imposed if the average is not maintained. $1 every month would meet the obligation. Since it didn’t result in an average of $250/month, it invokes the penalty interest.

Based on what you have posted you weren’t obligated to actually make any payments until the final date of the note. It would simply mean you owed the amount of the note plus 5% interest on that day.

And getting very technical, the sol is not obviously run even if you consider your claim of the cessation of payments in 2011 started the clock. Since you made a payment in June of 2011, given monthly payments no payment would be due until July of 2011 and that is when the clock would start. July 2011 plus 6 years is July 2017. Depending on the precise details, even that might have been within the sol


. I don’t believe it is needed though as starting payments on a loan generally is considered to reset the clock though. Heck, in some states the promise of payment is adequate to reset the clock.

 

[Dassault5209]

No. It actually provides for a situation where you failed to make payments or payments not meeting the written obligation. It doesn’t mean you have a default such as needed to start the clock.
Since the payment was to be an average, any payment is a payment. In other words, there is no set payment required only a penalty that would be imposed if the average is not maintained. $1 every month would meet the obligation. Since it didn’t result in an average of $250/month, it invokes the penalty interest.

Based on what you have posted you weren’t obligated to actually make any payments until the final date of the note. It would simply mean you owed the amount of the note plus 5% interest on that day.

And getting very technical, the sol is not obviously run even if you consider your claim of the cessation of payments in 2011 started the clock. Since you made a payment in June of 2011, given monthly payments no payment would be due until July of 2011 and that is when the clock would start. July 2011 plus 6 years is July 2017. Depending on the precise details, even that might have been within the sol


. I don’t believe it is needed though as starting payments on a loan generally is considered to reset the clock though. Heck, in some states the promise of payment is adequate to reset the clock.

What do courts generally deem to be a “cause of action”? So if you were paying $100 every month instead of $200 wouldn’t that still constitute a cause of action and start the SOL? I get how no payments at all would be obvious but even payments that don’t meet the requirements of the agreement.

 

[Taxing Matters]

What do courts generally deem to be a “cause of action”?

With a promissory note the cause of action occurs when the contract is breached, i.e. a required payment is not made on time. The problem with your situtation is that, as you have described it, the contract called for payments that average $250 a month. So in that instance the cause of action would not arise until it was no longer possible to make payments that average that. Just be extreme, suppose the debtor paid nothing until 24 months later, and on the 24th month he paid $6,000. He's now paid an amount that is an average of $250/month since $6,000/24= $250. As I don't have the exact language of the agreement nor the exact payments that were made (dates and amounts) I cannot give you a solid answer on when the SOL would run. But as the loan was taken out in 2011 and there is a 6 year SOL, the creditor had until a least sometime in in 2017 to file the lawsuit even if no payments were made at all. The fact that some payments were made may well extend the time the creditor had. I would not be surprised that indeed the creditor filed the complaint in time since it wouldn't have taken much push out the date that the cause of action accrues given the average payment concept that the agreement uses.