Consumer Law, Warranties Breach of contract for loan

[johnnyham89]

I'm doing this on my father's behalf. 1/9/08 and 3/20/08 are when both contracts were made. They are basically the same except the one on the 9th is for $35,000 and the one on the 20th is for $19,000. Both contracts included an interest charge of $7,000, so a total of $54,000 for the loan and $14,000 in interest. The contracts are made with this man's business whom which he is the owner of and states that his company will pay back the 35k plus interest no later than 6 months and pay back the 19k plus interest no later than 90 days in the other contract. My father has the original Certificate of Ownership for this man's business and a Texas Ordinary Certificate of Acknowledgment which are both signed.

What should be my father's first steps in taking legal action against this guy?

If there is any information that I am forgetting, please let me know and I will post it as soon as possible.

 

[army judge]

I'm doing this on my father's behalf. 1/9/08 and 3/20/08 are when both contracts were made. They are basically the same except the one on the 9th is for $35,000 and the one on the 20th is for $19,000. Both contracts included an interest charge of $7,000, so a total of $54,000 for the loan and $14,000 in interest. The contracts are made with this man's business whom which he is the owner of and states that his company will pay back the 35k plus interest no later than 6 months and pay back the 19k plus interest no later than 90 days in the other contract. My father has the original Certificate of Ownership for this man's business and a Texas Ordinary Certificate of Acknowledgment which are both signed.

What should be my father's first steps in taking legal action against this guy?

If there is any information that I am forgetting, please let me know and I will post it as soon as possible.

First of all, you didn't ask, but this may affect the court's ability to enforce the contract.
The interest of $14k on $54k of loans amounts to 26%.
The court may find that to be usurious.
If it does, the loans may be unenforceable.
Just be aware of that, because Texas has no specific statute setting interest caps.
But, the article below explains what courts consider usurous when deciding these cases.


Your father (or you, as his agent), should speak with a couple of attorneys about the contracts.
The contracts may not be drafted properly.
If not, that could present additional issues that I'm unable to address.
But, with over $50k at stake, you'd be unwise to proceed with retaining counsel.
You can't sue in small claims for this amount.
And, even if you bring the case yourself in county or district court, you'd have to know how to collect after you win a judgment.

So, simple answer, speak with a couple of local attorneys and ask them to review the contracts and any other documents you possess.

Once that has been done, you'll know where you need to go next, and how much it will cost.

The initial consultation is normally free.

The general legal rate of interest in Texas that is used on personal loans and in many consumer transactions has been set at 6%. The judgment rate of interest in Texas on civil cases is 18% or the contract rate of interest, whichever is less.

As referenced, there are a number of different ceilings when it comes to different types of loans in Texas. Beyond those that have been mentioned a moment ago, you need to be aware that state chartered financial institutions (banks, savings and loans, credit unions) have their own restrictions when it comes to interest rates and lending practices. Other types of lending services have their own interest rate structures that they must adhere to when doing business in Texas.

The specific statutes that are in place in Texas that deal with lending practices and interest rates can be found codified at Texas Statutes -- Business and Commerce Code.

Courts take two different approaches when it comes to dealing with loan agreements that appear to run afoul of applicable laws addressing interest rate caps. First, there are situations in which a court will declare the entire loan agreement void as being illegal and thereby unenforceable. On the other hand, a court can also reform the loan agreement to get rid of the illegal interest provision and replace it with a provision that sets interest at a rate allowed by law.

http://www.usurylaw.com/state/texas.php

 

[johnnyham89]

First of all, you didn't ask, but this may affect the court's ability to enforce the contract.
The interest of $14k on $54k of loans amounts to 26%.
The court may find that to be usurious.
If it does, the loans may be unenforceable.
Just be aware of that, because Texas has no specific statute setting interest caps.
But, the article below explains what courts consider usurous when deciding these cases.


Your father (or you, as his agent), should speak with a couple of attorneys about the contracts.
The contracts may not be drafted properly.
If not, that could present additional issues that I'm unable to address.
But, with over $50k at stake, you'd be unwise to proceed with retaining counsel.
You can't sue in small claims for this amount.
And, even if you bring the case yourself in county or district court, you'd have to know how to collect after you win a judgment.

So, simple answer, speak with a couple of local attorneys and ask them to review the contracts and any other documents you possess.

Once that has been done, you'll know where you need to go next, and how much it will cost.

The initial consultation is normally free.

Thanks for the help!

I've looked into the usury laws also. Would he be able to sue for just the principle then?

 

[army judge]

Thanks for the help!

I've looked into the usury laws also. Would he be able to sue for just the principle then?

Yes.

That was very smart and prescient on your part.