(a) Except as set forth in subdivision (b), a personal loan shall become a gift to the debtor for the purposes of this title in the following circumstances:
(1) If the loan has a defined date or dates for repayment, when the statute of limitations for filing an action for default has expired.
(2) If the loan has no defined date or dates for repayment, when one year has elapsed from the later of the following:
(A) The date the loan was made.
(B) The date the last payment of one hundred dollars ($100) or more was made on the loan.
(C) The date upon which the debtor has made payments on the loan aggregating to less than two hundred fifty dollars ($250) during the previous 12 months.
(b) This section shall not apply to the following types of loans:
(1) A loan made to the campaign committee of an elected officer or a candidate for elective office.
(2) A loan that would otherwise not be a gift as defined in this title.
(3) A loan that would otherwise be a gift as set forth under paragraph (a), but on which the creditor has taken reasonable action to collect the balance due.
(4) A loan that would otherwise be a gift as set forth under paragraph (a), but on which the creditor, based on reasonable business considerations, has not undertaken collection action. Except in a criminal action, a creditor who claims that a loan is not a gift on the basis of this paragraph has the burden of proving that the decision for not taking collection action was based on reasonable business considerations.
(5) A loan made to a debtor who has filed for bankruptcy and the loan is ultimately discharged in bankruptcy.
(c) Nothing in this section shall exempt any person from any other provisions of this title.
(Added by Stats. 1997, Ch. 638, Sec. 2. Effective January 1, 1998.)