Collections suit

[Scott B]

Jurisdiction

California

I have been served with papers from a $5,800 personal loan dated around 2019. Interest rate was 97%. Paid over $4k to the loan, yet balance kept rising. Let it go to collections owing around $6,300. Called debt owner right after being served and gave them a low settlement offer, which they refused. I would like to try Alternative Dispute Reolution but not sure how it works, do both parties have to agree to it? If I can do one of the options (mediation, etc), will the fact that I paid over 4K to a $5800 loan with a 97% interest rate (from what I read not even allowed in California anymore) carry any weight to a mediator or judge to a perhaps lower judgement amount? The documentation provided to me in the service about my past payments and transactions were very unclear and the dates/amounts/totals they had for me were in conflict with what I see (when I log into my old account for the loan). Wondering if those discrepancies will be trivial or not. I also spoke with my local court self help desk, they said if I responded to the lawsuit and tried to fight it could be over a year of "going back and forth". What does this entail? Sorry for the long wind but thank you in advance

 

[justblue]

I have been served with papers from a $5,800 personal loan dated around 2019. Interest rate was 97%. Paid over $4k to the loan, yet balance kept rising. Let it go to collections owing around $6,300. Called debt owner right after being served and gave them a low settlement offer, which they refused. I would like to try Alternative Dispute Reolution but not sure how it works, do both parties have to agree to it? If I can do one of the options (mediation, etc), will the fact that I paid over 4K to a $5800 loan with a 97% interest rate (from what I read not even allowed in California anymore) carry any weight to a mediator or judge to a perhaps lower judgement amount? The documentation provided to me in the service about my past payments and transactions were very unclear and the dates/amounts/totals they had for me were in conflict with what I see (when I log into my old account for the loan). Wondering if those discrepancies will be trivial or not. I also spoke with my local court self help desk, they said if I responded to the lawsuit and tried to fight it could be over a year of "going back and forth". What does this entail? Sorry for the long wind but thank you in advance

What type of lender was this loan from?...because 97% interest is usurious.

 

[Scott B]

Company name is NetCredit

 

[justblue]

I'm going to tag some of the attorney's that volunteer here


@Tax Counsel @army judge @zddoodah @Michael Wechsler

 

[Scott B]

What type of lender was this loan from?...because 97% interest is usurious.

Company name is NetCredit

 

[justblue]

Company name is NetCredit

Do you still have a copy of your loan agreement?

 

[Scott B]

Do you still have a copy of your loan agreement?

Yes I do

 

[adjusterjack]

Were you sued in small claims court? Look at the complaint. Is it an SC-100. If it looks like this, you're in small claims court.

https://www.courts.ca.gov/documents/sc100.pdf

If not, then you are in regular civil court and you might not be able to use arbitration unless your loan contract requires or allows for it, or the court requires it.

 

[Scott B]

It is a civil case, I will have to go through the loan contract to see if that is mentioned. Thank you!

 

[adjusterjack]

The documentation provided to me in the service about my past payments and transactions were very unclear and the dates/amounts/totals they had for me were in conflict with what I see (when I log into my old account for the loan).

Where are your own payment records? Like cancelled checks that you can get copies of at your bank.

 

[zddoodah]

I have been served with papers from a $5,800 personal loan dated around 2019.

I assume that you meant you took the loan in 2019, not that the papers are dated in 2019. Correct?

Interest rate was 97%.

Huh? That would be illegal and, unless you borrowed the money from a loan shark, there's no way that's true.

I would like to try Alternative Dispute Reolution but not sure how it works, do both parties have to agree to it?

That depends on what form of ADR you want to try. However, given the low dollar amounts you mentioned, the court could order you to mediate. Of course, if the case is in small claims court, there's not much point.

If I can do one of the options (mediation, etc), will the fact that I paid over 4K to a $5800 loan with a 97% interest rate (from what I read not even allowed in California anymore) carry any weight to a mediator or judge to a perhaps lower judgement amount?

If a judge is deciding your case, the plaintiff will be awarded whatever is supported by the terms of the loan agreement and other evidence. If you mediate, the mediator will consider all admissible evidence in trying to help you reach a resolution.

It is a civil case

That doesn't answer the question about whether or not you're in small claims court. Small claims suits are civil suits.

I'd strongly suggest seeking a consultation with a local attorney to review your documentation.

 

[Scott B]

I took the loan in 2017. Here's a screenshot of the interest rate from the contract. 97.30%

 

[Scott B]

Where are your own payment records? Like cancelled checks that you can get copies of at your bank.

I have them in forms of screenshots that I took of all my payment activity from the original online account login page.

 

[Zigner]

Huh? That would be illegal and, unless you borrowed the money from a loan shark, there's no way that's true.

There are MANY exemptions within California law as it relates to usurious practices. The interest rate is likely perfectly legal.

 

[zddoodah]

The interest rate is likely perfectly legal.

Based on what facts do you draw this conclusion?

 

[adjusterjack]

I took the loan in 2017. Here's a screenshot of the interest rate from the contract. 97.30%

The APR is not the interest rate. Look elsewhere for the actual interest rate.

I have them in forms of screenshots that I took of all my payment activity from the original online account login page.

Finally, somebody who does that besides me. Good for you.

There are MANY exemptions within California law as it relates to usurious practices. The interest rate is likely perfectly legal.

Based on what facts do you draw this conclusion?

The statute does have exceptions to interest caps. I don't know if 97.30% will cut it. Besides, as I already noted from OP's attachment the 97.30% is the APR, not the actual interest rate.

 

[retic]

Online reviews of NetCredit indicate that the APR on their loans ranges from 34% to a whopping 155% and they should be considered a lender of last resort.