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