Legal Question in Credit and Debt Law in California

If you take out a $5,000 personal loan from a private lender, e.g. Sprintleaf Financial, and if on the contract you allow them to write in your camcorder valued at $300 as collateral; and then five years later if you default on the loan which already worked its way down to $1,560 + interst and fees, can you not resolve the whole matter and avoid being sued by turning your camcorder over to them because that's what they had accepted in writing as collateral for the loan?


Asked on 6/20/13, 11:50 am

2 Answers from Attorneys

The only time a lender cannot collect the full amount of the loan regardless of the value of the collateral is if it is a purchase money loan for real property that will be the borrower's principal residence. Other than that, the inadequacy of the collateral has absolutely zero to do with the lender's ability to use all legal means to collect the full amount owed.

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Answered on 6/20/13, 12:12 pm

No they can still collect the balance on the amount owed.

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Answered on 6/20/13, 1:15 pm


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