Is there a statute of limitations on a personal loan?

If 2 states are involved, which state do you file a small claim in? I made a personal loan to my in-laws who live in another state and now they are denying that they ever borrowed it. It has been 4 years so I am worried it is too late to do more. I would have acted sooner but was being told that it was being handled over the years by my husband to just find out that it was not. I obtained the check records from my bank showing that it was signed by one of them (I had a signature on file to compare it to) and it was cashed at a specific bank in their state, but they are still acting aloof.

Asked on September 6, 2010 under Bankruptcy Law, Minnesota


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, there is a statute of limitiations on a personal loan, as there is on any debt. The statute does not run from when the loan was made, but rather from when the default happened--e.g. from when the borrower first missed a payment. In terms of which state's statute applies, that is a fact-by-fact question; depending on the circumstances, probably good arguments could be made to sue in either your state or theirs. You should consult with an attorney immediately, before any more time passes, to see (1) which state(s) you could or should file suit in; and also (2) whether you are still within the statuute of limitions. The attorney can also evaluate the evidence you have as to how strong you case is; for example, if all you have is proof that the relatives cashed a check, that doesn't answer the issue of whether it was a loan (they have to repay) or a gift (they don't).

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