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Loren, Attorney
Category: Business Law
Satisfied Customers: 33562
Experience:  30 years experience representing clients .
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I made a loan to my friend. He could not pay it on time. So

Resolved Question:

I made a loan to my friend. He could not pay it on time. So I want to make a promissory/cognovit note.
Which is better of the two and enforceable in Florida. Will it allow including language allowing confession of judgment.
What is the best route to take.
Submitted: 8 years ago.
Category: Business Law
Expert:  Loren replied 8 years ago.
Florida generally prohibits by statute confession of judgments :

55.05 Judgments; power of attorney to confess invalid.--All powers of attorney for confessing or suffering judgment to pass by default or otherwise, and all general releases of error, heretofore made or to be made hereafter by any person whatsoever within or without this state, before such action brought, shall be absolutely null and void.

Customer: replied 8 years ago.

In that case how does promissory note protect my interest ? What steps do I have to take in case of default.

Expert:  Loren replied 8 years ago.
Without collateral, you are an unsecured creditor. You may sue the borrower in court to enforce the note. Once you have a judgment you can attach and levy various assets and also garnish the borrowers wages to collect.
Customer: replied 8 years ago.
What is the interest rate I can legally charge on such note including late interest. (is this usury interest)

if it is usury interest , does the promissary note becaome illegal
Expert:  Loren replied 8 years ago.
The State of Florida has established a two tier system when it comes to usury limitations on personal loans. On personal loans under $500,000, the general usury limit that has been established in Florida is at 18%. For loans above $500,000, the general usury limitation has been set at 25%.

If the interest rate exceeds the limits stated above, you will not be allowed to enforce the interest on the note only the principal sum.
Customer: replied 8 years ago.
That means in that my penalty and interest both should be below 18%. Also does the promissory note have to be notorized.
Expert:  Loren replied 8 years ago.
Total interest must be kept under 18%. Notary is not required..
Customer: replied 8 years ago.
One last time, since the borrower has already defaulted, should I back date the note or should it be
as of date of signing....
Also I want to give him some time before I enforce this. I hope that does not reduce my rights becasue I did not enforce it right away at the time
of default
Expert:  Loren replied 8 years ago.
You do not have to back date the note. You can state in the recitals that it reflects and ratifies the debt made on the date you gave your friend the money. You can also state that the note is not waived by a failure to make a demand.
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