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Alex J. Esq.
Alex J. Esq., Attorney at Law
Category: Legal
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Experience:  Experienced Licensed Attorney
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Customer Question

Can a creditor collect interest on a loan which was made with the verbal understanding that it did not have to be repaid until the debtor was able to do so. Nothing in writing and no repayment schedule was discussed. Creditor and debtor had a falling out and creditor sued for amount loaned plus attorney fees. Debtor immediately informed creditor's attorney that the loan would be repaid in full (3K) immediately but attorney has indicated that both interest and attorney fees are due. Scottsdale Arizona.
Submitted: 1 year ago.
Category: Legal
Expert:  Alex J. Esq. replied 1 year ago.
Hello. My name is XXXXX XXXXX I will be happy to answer your question.

I am sorry to hear about this unfortunate situation.

Can you please tell me if there was a written agreement or promissory note, that stated the date when the debt would mature or be due or any interest rate stated or any provision that would allow the lender to collect attorneys fees in an event of a default?
Customer: replied 1 year ago.

No written agreement when loan made. No note. When falling out occurred, creditor demanded repayment in writing and debtor responded in writing (email) that she would pay $50 per month. No response from creditor. 8 payments were made and accepted. Debtor missed two months of payments. Creditor then sued. Never any mention of interest prior to lawsuit. I have told debtor I will loan her (my sister) the principal amount owing ($3400) and she called the collection attorney the day following service of summons and offered to pay amount immediately. He informed that he would check with the Creditor to see if the matter could be settled without payment of interest owned and atty fees.

Expert:  Alex J. Esq. replied 1 year ago.
Dear XXXXX,

Thank you for your follow up.

Was the small claims lawsuit already filed against your sister?

Did your sister answer the complaint yet?
Customer: replied 1 year ago.

Court action was filed and she was served with summons and complaint yesterday and has 20 days to respond. Not sure is is small claims court since the complaint was filed and served by a collection attorney. Sister has not yet responded other than to verbally offer to pay the principal debt in full.

Expert:  Alex J. Esq. replied 1 year ago.
Dear XXXXX,

Thank you for your follow up.

Your sister will need to file her answer to the complaint within 20 days and assert her affirmative defenses by stating her position.

Without a written agreement that would provide for the interest and attorney's fee for the lender, it is not likely that the court would award much in terms of the interest and very unlikely that the borrower will be able to collect attorney's fees and as long as your sister does respond and contest this lawsuit, it is very possible that the borrower might have a change of mind and might agree to settle this debt.

I wish you the best of luck and please let me know if you have any related follow up questions.
Expert:  Alex J. Esq. replied 1 year ago.
Do you have any related follow up questions for me?

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