Legal Question in Credit and Debt Law in California

personal loan contract

I received a personal loan in the amount of approx. 17000 from a former friend last year in Feb. and have been making monthly payments according to a contract we both signed at the inception of the loan. My personal vehicle is listed as collateral for this loan. Although my payments on this loan are current through May, due to recent job loss and cancer treatment, I notified my former friend that I would not be able to make the June payment and asked for some leniency on this month's payment. She responded by obtaining an attorney who has sent me a letter stating that if payment is not received they will initiate litigation. Can you please tell me what my rights are in this matter?


Asked on 5/22/09, 12:32 pm

1 Answer from Attorneys

David Gibbs The Gibbs Law Firm, APC

Re: personal loan contract

I'm a little puzzled by your question about rights. In your position, you are really not talking about rights you might have, rather, your inquiry should be what possible defenses might you have to the lawsuit that is coming your way. To answer that, an attorney would need to sit down a review the entire matter in detail. The interest rate set forth in the promissory note may be usurious, the note may be entirely defective as drafted, the agreement that it is secured by your vehicle may not be valid, and the security interest may not have been perfected. There are a lot of issues to look at, and I would suggest that you are going to want to review this with an attorney. Unfortunately, in the law, loss of a job and illness are not legally justifiable excuses for not paying your obligations, so you need to either attack this from the perspective that the agreement to repay the money is somehow defective or not enforceable, or settle with your former friend for some repayment arrangement that is acceptable to you both. Abesent that, if you have other debt, you may have the option of filing bankruptcy to deal with the debt. If you are going through cancer treatment, however, you may wish to hold off given that I assume you will be incurring substantial expenses for your treatment. Best bet is to meet with an attorney in the near future to review all of your options.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.

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Answered on 5/22/09, 2:55 pm


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