Thank you for your question. Wouldn't it be nice for lenders if they could pull numbers out of thin-air and demand that amount be paid? Fortunately for borrowers and common-sense, that isn't possible. There are two aspects that should be considered when a lender attempts to change the terms of an oral agreement after the money is lent. First, there is something called a usury law in Arizona. A usury law limits the interest that can charged on a debt. In Arizona, a lender is generally capped at 10% interest per year.
Lending money at greater than 10% interest in Arizona is generally a civil and criminal offense. Saying "I lend you $1,000 eight months ago--you now owe me $2,000" is essentially confessing to a criminal act in Arizona.
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Great now lets say I was in a state of severe delusional paranoia due to a mental illness when I entered into this agreement. And lets say I was living with this sister and while god was sending me messages through the computer and via text messages that my wife was trying to kill me my sister urged me to protect myself from my wife. This may sound crazy but I was really sick and my sister was taking care of me because I couldn't take care of myself.
Oh and my wife had a restraining order because I had threatened to kill her and my 10 year old son.
And I had just gotten out of jail during which I was placed in psychiatric care by the police and placed on psychiatric medication. Which when I got out my sister was paying for all of my medications. And this agreement was only 12 days after that.
That's kind of a red herring because, as I mentioned, there are are two issues. The first is the issue of the usury law. The second is the issue of evidence. Regardless of whether the borrower is suffering from a mental illness like paranoid schizophrenia (or just delusions with an undiagnosed mental illness), the lender carries the burden of proof in court. That means that the lender must prove the existence of the debt, and then the terms of repayment. It might be easy to prove a loan of $10,000 where the borrower does not dispute the loan since (1) the borrower doesn't dispute the loan, and (2) there is usually a paper trail showing the transfer of money, even if there is no written contract. But how is the lender going to prove that any interest is due? Or how is the lender going to prove that the loan gives the lender any additional rights or privileges? If it's the borrower's word against he lender, all other things being equal, the lender loses.
So regardless of whether the lender suffers from some sort of mental defect or illness, the question is how the lender would go about proving that they are entitled to anything other than a refund of the amount loaned. If it is just one person's word against the other, the lender is going to lose because the lender has to prove that it is more likely than not.
great understood. And the mental illness was legally diagnosed. I am Bi Polar 1 with manic psychosis.
Great thank you so much. I feel confident in not submitting to her terms.
Sure. And to be clear, mental defect can be a defense if the mental defect prevents the borrower from understanding the terms of the loan or if the illness give the borrower no choice, but (again), it's really not going to be necessary to discuss any of that if the lender has no proof except their own testimony.
My pleasure. Did you have any other question?
no. Thank you.
It was my pleasure. Because the nuances of every situation are different, this information should not be relied upon as complete or advice without consulting in person with an attorney, but that said, I am glad that this helps with your understanding of the law, and gives you some peace while waiting for this matter to fully resolve. Take care.
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