I lend a coworker $1500 for 6 biweekly payments of $350 for a grand total of $2100 in a 3 month period, I had him signed a promise note. The first 2 payments I got with no problem however for the past 2 months I'm getting the run around and he keeps avoiding me.Can I sue him for breach of contract at small claims court and not have any issues with the law due to the fact that I charged him interest on the note and I'm not paying any taxes on it?Feedback will be greatly appreciated thanks.
Dear Bronx Lender:
You may consider consulting a criminal defense attorney for an opinion whether your loan is an illegal usurious loan in New York State and so not capable of collection for nonpayment.
"An unauthorized person charging or receiving usurious interest at a rate exceeding twenty-five percent (25 %) per annum or the equivalent rate will be guilty of criminal usury in the second degree, under Section 190.40 of Penal Law provided in New York Consolidated Law Service. Criminal usury in the second degree is a class E felony."
If calculated to a correct figure your 1500 loan annualized (6000) pays back 8400; or 2400 in interest, is a 40% interest rate loan.
I have forty years experience in the specialty of Housing Law and Tenant's Rights advocacy. The answer I provided to you does not create an attorney and client relation. You are free to check my office contact information at my AVVO profile. The answer offered is in the nature of general information, and should not be considered as tailored legal advice. I offer answers as a service to the community with my firm belief that you should try gain a good outcome for your legal issue and to avoid a bad outcome if you can.
I agree with my colleague. Also, I believe if it's more than 16% per year it could be civil usury which even if you don't face criminal charges, you could lose the entire loan (the court could let the borrower keep the principal and not pay you back any interest). Since you probably didn't know any of this, and lacked intent to violate the law, perhaps you should see if you could "settle" the matter with your borrower, and negotiate the payback of your original principal plus a very modest interest rate and quietly let this matter go with that.
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