California  |  Credit and Debt Law

Legal Question

Asked on: 6/04/07, 2:26 am

usury and statute of limitations

In 2002 I accepted investments into my home based business from some aquaintences of mine. There were 8 different promissory notes (from the same investor) and I was paying 30% interest on the money invested. Suddenly in 2003 California EPA laws prohibited a chemcial that helped produce my goods and suddenly I was out of business. New plating technology has become available and I am now back in business at the same time that I have been served with a civil suit for breach of contract because 6 of the notes were never paid back. No interest was paid on any of the notes in the past 4 years.

All of the Notes were one year notes with interest only the first eleven months and a balloon payment on the 12th month. My main question is whether or not the statute of limitations for California (4 years for written contracts) would begin on the day the note(s) were due. If so, three of the notes would have reached the statute of limitations before the lawsuit was filed.

I am not looking for a way out of paying the notes, but I feel I need a barganing chip in trying to set up a payment plan to get it all cleared up.

Also, since the notes were usury how might that effect the overall validity of the lawsuit to begin with?

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