Legal Question in Business Law in California

I have a written contract with a person where I have loaned them $800 at 10% interest per annum and they have agreed to pay back the principal and its accrued interest after 3 months. It has been 2 years since the contract was entered into and the debtor has not paid back the money. He is a close friend and going through tough economic times, and so I am willing to be patient to get the money back. I do not think he doesn't want to pay me. I think he is just having serious economic problems.

The statute of limitations to bring an action on a written contract is 4 years from the date of the breach. It's already been 2 years, which means I only have another 2 years to get the money or I will have to sue. However, I do not want to have to sue a close friend just because of a statute of limitations. I want to see if we can extend the statute of limitations somehow.

I believe I remember reading in a book that parties can agree to reaffirm a debt. Therefore, I was thinking we would write a reaffirmation agreement to renew the statute of limitations. If the debtor and I agree to reaffirm the debt, will this renew the 4-year statute of limitations from the date of the reaffirmation agreement?


Asked on 7/08/10, 1:21 pm

3 Answers from Attorneys

Yes. The other alternative is to prepare an entirely new agreement in which you agree that the old debt is satisfied by the new agreement to pay you on X date with whatever accumulated interest you agree is due. That way the four years doesn't start running until X date, instead of right away as it would with a reaffirmation.

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Answered on 7/08/10, 4:28 pm
Edward Hoffman Law Offices of Edward A. Hoffman

You and your friend can also agree to toll the limitations period. Such an agreement would stop the clock for now, and would also specify when and under what circumstances it would start ticking again. It wouldn't give you the full four-year period, but it would preserve however much time you have left.

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Answered on 7/08/10, 4:40 pm
John R. Browning, Esq. [email protected] (949 234-6266)

You're better off doing a new promissory note, give him a new payment date that he can try and meet, and indicate in the new note that it cancels the older debt. Less of a mine field that trying to prepare a tolling agreement.

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Answered on 7/08/10, 4:54 pm


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