Legal Question in Civil Litigation in Missouri

Penalty on personal loan

A friend loaned me $2600.00 for a personal emergency. To my suprise, he had me sign a hand-written, un-notarized agreement stipulating a 10% penalty weekly if $2000.00 was not repayed within two weeks and the balance in another two weeks. I could not pay $2000.00 within the first two weeks. On November 20, 2004 5 weeks after the loan, I paid him $1500.00. He wrote informing me that I still owe $2800.00 because of the penalties, and according to him these panalties will continue to accrue. By his estimates, if I could pay ''his balance'', I would have paid him $4300.00 on a $2600.00 personal loan taken over a 5-week period. I am grateful for his help and told him so, but this is getting out of hand. He even wrote to a Co-worker telling them that I owe him money and I've had problems paying my bills in the past and verbally threatened to copy others. I plan to pay him the balance of $1100.00 in full on the 15th of December, and that will take care of the $2600 he loaned me. By his calculation, I'll probably must pay about $5000.00 or more by the time I am done paying him. Again I really appreciate his help, but is there something I can do legally to stop him from pilling these ridiculus charges on top of what he loaned me?


Asked on 12/01/04, 7:05 am

1 Answer from Attorneys
Kevin Plachta The Law Office of Kevin F. Plachta

Re: Penalty on personal loan

To be blunt about it--why did you even sign this agreement in the first place?

What your "friend" is doing is called loan sharking. I believe the legal interest rate in MO is 9 percent per year. I think it would be in your best interest to contact an attorney. Furthermore I would stop paying the money, except for the original amount your borrowed. Your friend would then be forced to file a law suit against you--but then again not knowing your friend he could have other ways of collecting. If he did file a suit and judge saw this written agreement no doubt he would toss it in the trash can

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Answered on 12/02/04, 10:30 am


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