Cana loan agreement be rewritten4 years later?
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Cana loan agreement be rewritten4 years later?
I loaned an individual $3,000 to help save their business. The date the loan was made is 3-17-06. The written loan agreement gave the individual six months(9-17-06) to pay back the loan. As of today, I have received no payment at all. If I understand California law concerning this, I have four years from the due date to pursue legal action or forfeit that right. Is it legal to write a new loan agreement to replace the existing agreement ? I am reluctant to take legal action if there is another way.
Asked on July 14, 2010 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
If your question is, can the two parties to a loan agreement write a new loan agreement to replace an old one? The answer is yes, just as the two parties to any contract may agree to extend, alter, replace, modify, etc. it. (A loan agreement, when you get down to it, is simply a contract, after all.) However, before doing this, ask yourself: will rewriting the agreement actually do anything for you? If the other party has not paid by now, why do you think they will pay later? That does not necessarily mean you should sue--it may be, especially if the other party has only limited or no assets, that suing will cost more than you can effectively recover. However, unless you can think of a reason why you believe circumstances might change in the future, it probably makes sense to either sue now or to write off the loan now and take a tax loss of some kind (speak to a tax preparer or accountant about what kind of a benefit you may be able to get).
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