In 2003 a family friend of my mom's loaned me money to catch up on back mortgage payments. In early 2004 I was injured and had my neck broken. I lost the ability to work and my house went into foreclosure. I looked into selling the house prior to foreclosure and the family friend sent me to a lawyer for help who tried to rip me off. This lawyer lost his licsence to practice after this. The bank understood my situation and bought me out of my mortgage for $500.00 and they took over the house. I was released from all financial responsability. Then the bank sold the house to a private buyer who had a search done on the property for back attached debt and liens. There were none. Eight years went by and the family friend NEVER asked for any payments. Now, after all this time, he has approached me and asked me to start repaying. Aren't all debts ignored for seven years cleared legally if no collections actions were ever taken?
Answer
If the debt is outside of the statute of limitations, you have no legal obligation to repay the loan. The statute of limitations is six years on contract actions. Whether the debt is outside of the statute of limitations is very fact specific, and you should speak with a lawyer if the other party attempts to sue you.
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