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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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I was thinking about loaning a friend a substantial amount

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I was thinking about loaning a friend a substantial amount of money. About 30K with a term of 5 years and monthly payments to start a month after the loan. I was thinking of charging 5% interest. (I researched the current loan market, the lowest right now is 5.16% on home equity loans.) I am currently getting 2.5% in CD's. I want to know if it is advisable and if there could be a clause in the contract to guarantee that if they ever had to file bankrupcy I would still get paid? They have equity in their home which is worth over $200K but he is self employed and can't get a loan with today's banking squeeze.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 8 years ago.

Hello,


Thank you for your question. I am happy to assist you.


Clauses that state that a debt is not dischargable in bankruptcy are not given any legal effect in a bankruptcy. Such clauses are void.



To protect your loan you could consider securing the loan against the house. You would then have a secured loan and, in the event of nonpayment, could foreclose against the house.


I hope that the information which I provided was helpful to you.


Best wishes for a successful outcome. If you have additional questions, please do not hesitate to submit them to me directly.


Thank you,
FLAandNYLAWYER


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