What is the statute of limitations on personal loans?

The statute of limitations on personal loans in California is typically four years. This means that a lender must commence an action within four years of default on the loan in order to sue for repayment. It is important to note that although the four year clock starts upon default, the lender may still contact you for payment during this period. The collection process does not necessarily stop due to the statute of limitations. Under the Consumer Debt Defense Law in California, lenders may agree to accept alternate payment arrangements or a settlement if the amount of debt is reduced. Additionally, if the statute of limitations has expired, the lender may still choose to accept voluntary payments made by the borrower. However, any payments made after the expiration of the statute of limitations does not restart the statute of limitations and will not protect the borrower from the possibility of a lawsuit. It is possible for the statute of limitations to be reset if the borrower acknowledges their debt by payment or written agreement. This is known as ‘tolling’. If the statute of limitations is tolled, the lender may be able to pursue collection action or a lawsuit beyond the four year window. It is important to note that the statute of limitations is different for each type of debt, and may be different in each state. A qualified attorney should be consulted before making any decisions with regards to debt.

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What is the statute of limitations on personal loans?

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