How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Legalease Your Own Question

Legalease
Legalease, Lawyer
Category: Legal
Satisfied Customers: 14511
Experience:  15 years exp all aspects of general law
20355756
Type Your Legal Question Here...
Legalease is online now
A new question is answered every 9 seconds

I have a promissory note for $100K, the note is written to

Resolved Question:

I have a promissory note for $100K, the note is written to be handled with Delaware state laws. But the note was written for 20% interest compounded yearly. The note defaulted and is in second year of me not paying it. It is a single person writing the loan to a LLC which is incorporated in the State of Delaware. The company is not doing very well. Is it true that according to usury laws this is illegal? Title 6, Subtitle II, Chapter 23 in del code has a line 2304 part b about rights and remedies of the borrower. It says that I can collect up to 3 times of what interest is collected? Is the note illegall? Would it be possible that I would not have to pay it. Since the company is close to being left with no money and is about to be closed.
Submitted: 1 year ago.
Category: Legal
Expert:  Legalease replied 1 year ago.

Hello there

-

I am happy to review the DE usury laws -- please be aware that there are a lot of exceptions to the usury laws which render most usury statutes pretty much useless for the average consumer (for example -- credit card companies can charge up to 30% and that is using a loophole/exception in most states). I may have to ask you some additional questions regarding the note and the circumstances surrounding the execution of the note. For now, can you please tell me what the funds were used for at the time that you received them (sometimes it matters with the usury laws......)

-

MARY

Customer: replied 1 year ago.

They were used for business development, trade shows, software development, and marketing material. Also the company was a Inc. registered in the state of delaware.

Customer: replied 1 year ago.

FYI I have not paid any interest yet...But is it possible for me to not have to pay any of the loan or b not have have to pay the interest is my question.

Expert:  Legalease replied 1 year ago.

Raj -

-

Who had the LLC and who had the corporation? You have me a bit confused. From your first question posting, it sounded like you were an individual signing a note to an LLC. In your second posting you stated that they are a corporation?

-

Thank you for clarifying this for me and please give me 20 minutes or so to research and get an answer posted for you. THANKS

Customer: replied 1 year ago.

Hi


 


I am one of the owners of an Inc. An individual person made the loan out to my corporation.

Expert:  Legalease replied 1 year ago.

Hello again Raj --

-

It took me a while to research this because of the language of the statute in Delaware --

The interest rate is Delaware is actually as follows from 2301 (a) 5% over the federal reserve prime rate for any consumer loan in the state and (b) no limit on the interest rate if the loan is greater than $100,000 and the loan is not secured by a mortgage against the principal residence of the borrower. Now, while you can certainly use the defense of usury against the lender or any bankruptcy court on behalf of the lender that tries to pursue you for payment of this loan because your loan is not greater than 100K, it seems that there is an exception to the rule where the loan is not a consumer credit loan. From your description of the parties and the loan and what it was used for, you entered into a business loan and it was between two consenting business people -- and the lender or a bankruptcy court will claim to the court that you are not an average consumer as far as this transaction is concerned. In fact, Section 2305 of the same statute states: "Nothing in this chapter shall affect the holders of negotiable paper taken bona fide in the usual course of business" -- and because a promissory note is actually a negotiable instrument under business and commercial laws of Delaware and throughout the US, the lender will most likely be able to get around the usury laws set forth at 2301 and enforce the rate of interest against you. If the loan had been taken for household or family purposes or you were a consumer getting a loan for a house or land, etc, then this interest rate charged on the note would be found to be usurious under the DE code. However, as I said, because a loan between two business entities is viewed differently by the courts (you are each assumed to be equal to the other in business and commercial dealings and negotiations and as a business person you a court will find that you are and were capable of negotiating the best business deal that you can get under any lending circumstances). Again, this is not to say that you should not use the statute 2301 as a defense against any enforcement action of this note -- it is worth a try to at least delay collection activity on it -- but once a court determines why the loan was given and what it was used for (business purposes) -- the note will not be found to be usurious or illegal under DE law.

-

I truly wish I could tell you something different here -- I did review the DE law at some length and that is why it took such a long time to get you these answers. I hope that you keep in mind that I am unable to tell you anything but the legal truth of the matter even if that truth is not very helpful to your current situation. Please understand that if I could give you a different answer, I would do so -- and I hope that you will press a positive rating below this answer box so that I will be paid for my time in assisting you today. I am paid NOTHING unless you press "OK" "Good" or "Excellent" below this box (the 3rd, 4th or 5th smile face below) -- and even if I could not find something to get the note tossed out of court I truly did research this for you in order to find the best possible solution that I could. Pressing a positive rating below will NOT cost you any additional money -- it simply acts as the trigger to Just Answer to pay me for my time in assisting you today.

-

THANK YOU VERY MUCH !!

-

MARY

-

Please press the 3rd, 4th or 5th smile face below so I will be paid for my time. I am paid NOTHING unless you press a positive rating below. Pressing a positive rating below will NOT cost you any additional money -- it simply acts as a trigger to Just Answer to pay me for my time. THANK YOU VERY MUCH

Customer: replied 1 year ago.

Are you an actual lawyer in the state of Delaware? If not which state are you a lawyer in. I am looking for legal services.

Expert:  Legalease replied 1 year ago.

Hello again Raj -

-

While I appreciate it, we are not permitted to represent or even contact customers outside of this website forum and if I do so I could be dismissed. I am currently in MA but I have practiced in DE and set up a lot of corps and LLC's according to DE law in the days before any other state recognized single member LLC's and DE was the only one (late 1990's, early 2000's) . I know of a few good firms in DE but most of them are with really big companies (meaning very expensive) and you would probably be better off if you contact the DE bar association referral service and ask them for a referral to a lawyer who specializes in small business law. You may have to speak with a few of them and get some references from smaller businesses that they represent, but it will be worth looking around for someone competent to handle these matters for you.

-

MARY

-

If you have not done so already, can you please press the 3rd, 4th or 5th smile face below so I will be paid for my time. I am paid NOTHING unless you press a positive rating below. Pressing a positive rating below will NOT cost you any additional money -- it simply acts as a trigger to Just Answer to pay me for my time. THANK YOU VERY MUCH

Legalease, Lawyer
Category: Legal
Satisfied Customers: 14511
Experience: 15 years exp all aspects of general law
Legalease and 8 other Legal Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Not only did he answer my Michigan divorce question but was also able to help me out with it, too. I have since won my legal case on this matter and thank you so much for it. Lee Michigan
 
 
 

Meet The Experts:

 
 
 
  • Tina

    Lawyer

    Satisfied Customers:

    8436
    JD, BBA Over 25 years legal and business experience.
< Last | Next >
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Lawyer

    Satisfied Customers:

    8436
    JD, BBA Over 25 years legal and business experience.
  • http://ww2.justanswer.com/uploads/RA/ratioscripta/2012-6-13_2955_foto3.64x64.jpg Ely's Avatar

    Ely

    Counselor at Law

    Satisfied Customers:

    19941
    Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    8189
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/jespoag/2008-12-17_222355_jessepic.jpg JPEsq's Avatar

    JPEsq

    Attorney

    Satisfied Customers:

    2132
    Experience as general attorney, in house counsel, SSDI, Family Law attorney, and law professor
  • http://ww2.justanswer.com/uploads/gsenmartin/2008-04-22_214950_me1.jpg Guillermo J. Senmartin, Esq.'s Avatar

    Guillermo J. Senmartin, Esq.

    Attorney

    Satisfied Customers:

    110
    7+ years of experience handling various legal matters.
  • http://ww2.justanswer.com/uploads/PA/PaulmoJD/2013-10-10_195858_JAImage.64x64.jpg Law Educator, Esq.'s Avatar

    Law Educator, Esq.

    Attorney

    Satisfied Customers:

    31621
    JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    15975
    Multiple jurisdictions, specialize in business/contract disputes, estate creation and administration.
 
 
 

Related Legal Questions