I have an unsecured loan document signed by him as President of the company he ran (now out of business). He paid monthly payments (interest only) for 21 months. No principal was ever paid. Now 7 years out am I too late to do anything?
Chapter 7 Bankruptcy Attorney
You may wish to check the statute of limitations in the state where your friend lives to see if it has expired. The statute of limitations begins from the time the last payment was made.
Contact an experienced collection attorney in the community where your "friend" lives to pursue this matter.
Hope this perspective helps!
You've certainly harmed your position by waiting, and you may indeed have lost all your rights.
Under section 16.004 of the Texas Civil Practice & Remedies Code ( http://law.onecle.com/texas/civil/16.004.00.html ): "A person must bring suit on [an action for debt] not later than four years after the day the cause of action accrues." Your cause of action for collecting this unpaid debt accrued -- that is, came into existence -- when your friend missed his first payment. If that was before August 18, 2007, then your potential lawsuit is very likely subject to a statute of limitations affirmative defense.
There may also be issues with capacity: If the debt wasn't personally guaranteed by your "friend" and the company no longer exists, you may have a difficult time holding the "friend" liable even apart from the limitations problem. Depending on how he went about winding down the company's business, he may or may not have continuing personal liability for the former company's debts; but there too you may have limitations problems, and piercing the "corporate veil" (which generally protects shareholders from personal liability) is difficult even when a company has just been closed (without, e.g., going through a Chapter 7 bankruptcy or a formal winding down with notice to creditors, etc.)
While the law sometimes protects deadbeats, it sometimes does so only grudgingly. There are a limited number of potential exceptions that can sometimes defeat a statute of limitations defense. For example: If your friend was abroad or otherwise hiding out to avoid being sued during all or part of that time, you might have an equitable argument to get around a limitations bar. If you were under a legal incapacity that would have prevented you from suing, that might have "tolled" limitations for a time. If your friend has subsequently acknowledged (admitted) his liability for the debt even without making a further payment, then that might have re-started the limitations clock.
So if -- but ONLY if -- you think your "friend" now has sufficient assets (beyond his homestead-exemption assets) so that he could pay off if forced by a court judgment to do so, then you may want to talk with a lawyer about whether you qualify for one of those exceptions. Your potential claim may have some huge hurdles to overcome, but if you have a solvent defendant, your claim may still have some value. Depending on how strong an argument can be developed to get around limitations, however, your claim may not be solid enough for a lawyer to want to gamble his time on it through a contingent-fee arrangement; you might have to agree to a blended fee (part contingent, part lowered hourly rate) or a traditional hourly-rate engagement, meaning you'd have to spend some money to try to get back some money.
Whatever rights you may have obviously become weaker with every day that you continue to "sit on them." If you're ever going to find out what your rights are, do it NOW, or just forget the whole thing.
By the way, I'm assuming you, your "friend," and the company are all based in Texas and that the loan was made and partially repaid here. That could make a big difference if my assumption is wrong.
In particular, if the "friend" lives elsewhere, it's possible that you might be able to sue there to take advantage of a longer statute of limitations. There are a few states (e.g., Indiana, Massachusetts, Ohio) whose statutes of limitations on debt collections based on a written agreement are considerably longer (i.e., the creditor's right isn't barred as quickly) than in Texas.