How does this statute of limitations work?

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How does this statute of limitations work?

I was at fault in a car accident almost 3 years ago (in 3 days). Our auto insurance didn’t cover the entire amount of the other parties’ losses. One of the insurance companies filed suit but it was dismissed in a bankruptcy that discharged 4 months ago. The other insurance company just sent us a letter saying we pay or they sue. The statute of limitations to sue for property damage is 3 years. That means that they have to file suit by the 26th of this month, right? And if they do file suit, does it have to be in small claims because the amount is $2,600? If it is a small claims suit, what does that mean for us?

Asked on January 23, 2012 under Accident Law, California

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you do not reaffirm the debt owed or anything owed to this insurance company, then yes you are correct. Absent any tolling of the statute of limitations, the company only has three years under your state's law to file suit. Tolling means that the statute of limitations clock is stopped for a while depending on outside circumstances. Filing bankruptcy has probably tolled the statute of limitations because most litigation is stayed without leave of court to continue. Consider talking to a lawyer about your options. It doesn't have to be filed in small claims court; the insurance company can file in small claims or superior or district court.


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