was linked with a MLS side Toronto want to sign him but talks never materialised. Shortly after, Wallace made a recovery from his injury in early–March and spent two months, making progress on his recovery and featuring in the club's reserve matches. It wasn't until on 11 May 2008 when he made his return on the final game of the season, starting the whole game, in a 1–0 loss against Arsenal. At the end of the 2007–08 season, Wallace went on to make twenty–two appearances and scoring once in all competitions. Preston North End Over the summer transfer, Wallace remained on the transfer list, leading interests from Preston North End and Sheffield United. In the 2008 summer transfer window, it was reported that he rejected a move to Preston North End and stay at Sunderland to fight for his place in the first team. Following this, Wallace was taken off the transfer listed and he later thanked manager Keane for giving him a second chance to play for the club ahead of the 2008–09 season. However on 31 July 2008, Wallace eventually signed a year-long loan at Preston with a view to a permanent deal at the end of the season. He made his debut for the club against Chesterfield in the first round of the League Cup, starting the whole game, and set up a goal for Neil Mellor, in a 2–0 win to advance to the next round. A week later on 23 August 2008, Wallace made his league debut, coming on as a 55th-minute substitute for Barry Nicholson, in a 1–1 draw against Sheffield Wednesday. Having started out from the substitute bench, he regained his first team place, playing in the midfield position. Wallace then scored his first goal for Preston North End, in a 2–0 win over Watford on 28 October 2008. He later scored two more goals by the end of the year, coming against Bristol City and Barnsley. Wallace signed a permanent four-and-a-half-year contract with the club on 12 January 2009. A month later on 21 February 2009, he scored his first goal since joining Preston North End on a permanent basis, in a 3–1 loss against Southampton. Wallace soon became a fan favourite, due to the number of times he provided excellent crosses, mainly for Jon Parkin and went on to provide nineteen assists. At the end of the 2008–09 season, Wallace went