[WSBAPT] Statute of limitations

[Eric Nelsen]

Not sure what you are looking at specifically, but in general: discharge of a debt in bankruptcy does not actually eliminate the debt; instead, it bars the plaintiff from pursuing the debt against the bankrupt debtor.

The deed of trust on the property is still valid and can be foreclosed, for so long as the underlying debt has not passed the usual (RCW, non-bankruptcy-related) statute of limitations.

In other words, the actual Washington law statute of limitations on the debt is still used for purposes of determining whether or not a creditor can foreclose the deed of trust. NOTE: Bankruptcy can have an effect on calculating the statute of limitations. I don't know enough to tell you whether it's a full tolling during pendency of the bankruptcy, or just a slight extension of time post-stay to file a complaint. The issue is mainly Sec. 108(c) of the bankruptcy code--see the discussion at https://www.abi.org/abi-journal/section-108-toll-or-trap re 108(c).

If the statute of limitations on a debt has passed, the deed of trust is a cloud on title and can be stripped with a quiet title action, RCW 7.28.300<http://app.leg.wa.gov/RCW/default.aspx?cite=7.28.300>.

The question is, whether the S/L has passed. In addition to the effect of bankruptcy provisions described above, keep in mind the fact that S/L runs on installment debt as to each installment, not as to the whole, unless the creditor declares a default and accelerates the debt. From an earlier posting on that issue:

S/L on an installment note is separate for each missed payment, unless the total amount is accelerated. Here's the authority quoted in an unpublished case, Kirsch v. Cranberry Financial LLC, 69959-8-I (Div. 1, December 23, 2013):

Generally, actions based on written contracts must be commenced within six years after breach. RCW 4.16.040. The general rule for debts payable by installment provides, "A separate cause of action arises on each installment, and the statute of limitations runs separately against each ...." 31 Richard A. Lord, Williston on Contracts § 79:17, at 338 (4th ed. 2004); see also 25 David K. Dewolf, Keller W. Allen & Darlene Barrier Caruso, Washington Practice: Contract Law and Practice § 16:20, at 196 (2012-13 Supp.) ("Where a contract calls for payment of an obligation by installments, the statute of limitations begins to run for each installment at the time such payment is due"); Hassler v. Account Brokers of Larimer County. Inc.. 274 P.3d 547, 553 (Colo. 2012) (same); Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of CaL 522 U.S. 192, 208-09, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997) (same).[9] But if an obligation that is to be repaid in installments is accelerated- either automatically by the terms of the agreement or by the election of the creditor pursuant to an optional acceleration clause-the entire remaining balance of the loan becomes due immediately and the statute of limitations is triggered for all installments that had not previously become due. 31 Richard A. Lord, supra, § 79:17, at 338; § 79:18, at 347-50; 12 Am.Jur.2d, Bills & Notes § 581 (same); Bay Area, 522 U.S. at 208-09 (same). The statute of limitations commences upon maturity of a note. A.A.C. Corp. v. Reed. 73 Wn.2d 612, 615, 440 P.2d 465 (1968).

FN 9 reads:
Kirsch contests this rule, arguing that Cranberry cites distinguishable family law cases for the proposition that the statute of limitations runs against each installment separately. Though some of Cranberry's cited cases are family law cases, they describe a general proposition of contract law applying to all contracts in which installment payments are due. Further, some of those family law cases cite 82 A.L.R. 316 (1931), which addresses in general terms, "[w]hen Statute of Limitations begins to run against an action to recover upon contract payable in installments" and describes the general rule: "The general rule in such a case is similar to the general rule herewith noted in the case of contract obligations, it having been held that the Statute of Limitations begins to run from the expiration of the period fixed for the payment of each installment as it becomes due, for the part then payable." See Herzog v. Herzog, 23 Wn.2d 382, 388, 161 P.2d 142 (1945).

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1417 31st Ave South
Seattle WA  98144-3909
phone 206-625-0092
fax 206-625-9040

From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Joyce S Schwensen
Sent: Monday, April 16, 2018 1:24 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Statute of limitations


Anyone out there knowledgeable regarding the statute of limitations for demanding payment of a deed of trust where the underlying debt was discharged in bankruptcy?

Thanks, Joyce


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