How Long do You Have to Try to Recover Money from a Personal Loan

My question involves collection proceedings in the State of: PA

My father would routinely make personal loans to friends and acquaintances of his. He had a very good working relationship with one in particular, who he make several loans with. In 1999, my father agreed to loan this guy and his wife $100,000 to start a business. An official promissory note was written up by a lawyer (who is now deceased) and both the guy and his wife signed the note. He made several payments in 1999 and 2000 and then his business went bust. Are we too far past the SOL to try and do anything to collect this debt, or is there anything we can do?

The SOL on filing a lawsuit in PA is 4 years.

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The Pennsylvania Statute of Limitations on written contracts, oral contracts, promissory notes, and open-end accounts is 4 years. (42 Pa. C.S. 5525(a))

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§ 5525. Four year limitation.

(a) General rule.--Except as provided for in subsection (b), the following actions and proceedings must be commenced within four years:

(1) An action upon a contract, under seal or otherwise, for the sale, construction or furnishing of tangible personal property or fixtures.

(2) Any action subject to 13 Pa.C.S. § 2725 (relating to statute of limitations in contracts for sale).

(3) An action upon an express contract not founded upon an instrument in writing.

(4) An action upon a contract implied in law, except an action subject to another limitation specified in this subchapter.

(5) An action upon a judgment or decree of any court of the United States or of any state.

(6) An action upon any official bond of a public official, officer or employee.

(7) An action upon a negotiable or nonnegotiable bond, note or other similar instrument in writing. Where such an instrument is payable upon demand, the time within which an action on it must be commenced shall be computed from the later of either demand or any payment of principal of or interest on the instrument.

(8) An action upon a contract, obligation or liability founded upon a writing not specified in paragraph (7), under seal or otherwise, except an action subject to another limitation specified in this subchapter.

(b) Special provisions.--An action subject to section 8315 (relating to damages in actions for identity theft) must be commenced within four years of the date of the offense or four years from the date of the discovery of the identity theft by the plaintiff.



(Oct. 5, 1980, P.L.693, No.142, eff. 60 days; Dec. 20, 1982, P.L.1409, No.326, eff. 60 days; June 19, 2002, P.L.430, No.62, eff. 60 days)



Cross References. Section 5525 is referred to in section 5529 of this title.

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Too late by 12 years. Was there any collateral on the loan or was this just an unsecured loan? Did the debtor file for Bankruptcy when his business failed. Was the contract signed "under seal"? Documents signed under seal are documents with the word “seal” in the signature block. The SOL on these contracts is 20 years. There are also certain events that might have tolled the SOL, but 12 years is doubtful.

Thank you. I assumed so. What if he had made sporadic payments much later than 1999-2000? In 2001, the guy and his wife attempted to file for Chapter 7 bankruptcy, however the Court ruled against it given the amount of debt. This guy did make a few payments here and there, trying to make good on his promise. If we could prove a payment was received later, would that extend the SOL? I'm assuming even if we could, the payment would have to have been made in or around 2011? Does that make sense? I'm fishing here. I basically told him it was too late and that that ship had sailed.

With six figures on the line, your father should pull together all of the documentation of the original loan, documentation and dates for all payments received, documentation of any promises to pay and when they occurred, and anything else that might be relevant to the claim, and then have them reviewed by a lawyer. If you want to offer some dates here, we may be able to comment further.

Many states have specific statutes addressing how a payment or acknowledgment affects an SOL. Some don't. And some specifies that a payment or acknowledgment does not.

I don't find anything in the PA limitations statutes that address the issue.

The statute says this:

"5502. Method of computing periods of limitation generally.
(a) General rule.--The time within which a matter must be commenced under this chapter shall be computed, except as otherwise provided by subsection (b) or by any other provision of this chapter, from the time the cause of action accrued, the criminal offense was committed or the right of appeal arose."

http://law.justia.com/codes/pennsylv.../section-5502/

A cause of action for a debt generally accrues upon default.

You might have to look to case decisions to determine if a payment restarts the SOL.

For $100,000 your father would be wise to consult an attorney.

Thank you all. We are in the process of compiling all documentation from the loan agreement and all financial records. Once I get a better handle on all the dates I will post back here for any additional opinions and I will also recommend to him that we take all the documentation to a local lawyer for evaluation.

I wanted to provide an update now that I have ALL the paperwork related to this. Still sorting thru it all but here is what I know:

The loan amount was $161,067.06 and the promissory note was executed on August 31, 2006.
Payments were made up and until August of 2010.
On October 11, 2010, my father received a proposed Proof of Claim to be filed with the U.S. Bankruptcy Court. This Proof of Claim indicates that $151,480.00 is owed.
On January 12, 2011, a copy of the Voluntary Petition filed by the debtor was received. This document indicates my father as a creditor for a loan totaling $162,000.

Even with these new dates, I'm assuming the SOL of 4 years prohibits us from taking any further action.

Also, from my understanding, the bankruptcy proof of claim was rejected by the Court due to the amount being too high.

4 day bump.

The bankruptcy may have tolled the SOL for about a year but that means that time was up August 2015.

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Quoting budwad

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The bankruptcy may have tolled the SOL for about a year but that means that time was up August 2015.

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Ok I figured nothing could be done. Thanks for confirming. I feel horrible for my father. He sat on this forever and now is screwed. Win some, lose some I guess.

For the kind of money you are speaking of, it is still a good idea to run this by an attorney.