We strongly recommend reviewing the loan documents with bank counsel to determine if the bank has a right of setoff in the crop income, based on the terms of those loan documents.

The statute of limitations for enforcing a promissory note in court is ten years from the date a default occurred. However, each subsequent payment on the note after a default, or a new promise to pay, resets the commencement of the ten-year limitation period. This period can be extended under certain circumstances, such as the borrower moving out of state or the death of the borrower before the limitation period has expired.

Whether the limitation period has run in this case is a matter to review with your counsel. That said, in Illinois, the expiration of the statute of limitations period does not extinguish the underlying debt. Accordingly, we do not believe the expiration of the limitation period to legally enforce the terms of the promissory note would bar any right of setoff that may exist.

Whether your bank still has an enforceable mortgage lien on the property is a question that also should be reviewed with bank counsel. The statute of limitations for commencing an action to foreclose a mortgage is ten years after the right to foreclose or hold a foreclosure sale accrues. Given that the loan was charged off due to a default occurring thirty years ago, the limitation period, even with any applicable extensions, may have long passed.

For resources related to our guidance, please see:

• Illinois Code of Civil Procedure, 735 ILCS 5/13-206 (Actions on promissory notes “shall be commenced within 10 years next after the cause of action accrued; but if any payment or new promise to pay has been made, in writing . . . within or after the period of 10 years, then an action may be commenced thereon at any time within 10 years after the time of such payment or promise to pay.”)

• Owens v. LVNV Funding, LLC, 832 F.3d 726, 731 (“In most jurisdictions, including Illinois and Indiana, the expiration of the statute of limitations period does not extinguish the underlying debt. . . . ‘The statute of limitations controls the remedy for recovery of debt, but the debt remains the same as before, excepting that the remedy for enforcement is gone.’ In other words, a time-barred debt is still a debt, even if the creditor cannot file a collection suit.”)

• Illinois Code of Civil Procedure, 735 ILCS 5/13-208 (“. . . if, after the cause of action accrues [against a person], he or she departs from and resides out of the state, the time of his or her absence is no part of the time limited for the commencement of the action.”)

• Illinois Code of Civil Procedure, 735 ILCS 5/13-209(b) (“If a person against whom an action may be brought dies before the expiration of the time limited for the commencement thereof, and the cause of action survives, and is not otherwise barred: an action may be commenced against his or her personal representative after the expiration of the time limited for the commencement of the action, and within 6 months after the persons death. . . ”)

• Illinois Code of Civil Procedure, 735 ILCS 5/13-115 (“No person shall commence an action or make a sale to foreclose any mortgage or deed of trust in the nature of a mortgage, unless within 10 years after the right of action or right to make such sale accrues.”)

• Taylor, Bean & Whitaker Mortgage Corp. v. Cocroft, 2018 IL App (1st) 170969, ¶ 13 (“The statute of limitations for a mortgage foreclosure case is 10 years (735 ILCS 5/13–206 (West 2012)), and the date of default alleged in the complaint was June 1, 2008. Therefore, plaintiff had until June 1, 2018, to refile its complaint. . . .”)