Legal Question in Credit and Debt Law in California
In California I would like to lend $50K to another person without any collateral involved. Un Secured loan.
Do Usury laws apply to such loans when the lender is a private person.
In case of non payment of the debt by the borrower how can the lender recover its funds . Is getting a judgment against the borrower one option? How much can that cost and the time involve to recover?
2 Answers from Attorneys
Getting a judgment is an option but what if they have no money to repay you or they go bankrupt?
Really, lending 50K in an unsecured loan? My thought is that you are giving this money away. I recommend seeing an attorney. If you are willing to loan this type of cash, you could afford paying an attorney to sit down and discuss this and f you still decide you want to do this, they can help draft the note..
The usury laws would apply to this type of loan.
Your only method of recovery if the person does not pay is to sue in court. If the person goes bankrupt, then you risk receiving nothing at all from your borrower.
A lawsuit for $50,000 will take place in Superior Court. It will take a number of months, and over a year if you have to go to trial. Your costs depend on how hard the other side fights, and how much you pay your lawyer. It will easily be thousands of dollars.
Think twice about lending money without obtaining proper security.
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