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Legalease
Legalease, Lawyer
Category: Real Estate Law
Satisfied Customers: 16379
Experience:  13 years experience in RE Law, including LL/Tenant, contractor disputes, comm'l prop. issues
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My question is regarding a personal loan used by debtor in a

Customer Question

My question is regarding a personal loan used by debtor in a real estate transaction, but not back by equity in the property so that he could "flip" the property. I loaned a friend money in the amount of $xx,xxx (too big for small claims) at the rate of 10% a month, with the loan being due in 90 days. The loan contract list the person i loaned the moneys to name, purpose of loan, address of the property, with a clause saying if not paid subject to interest, but not a specified amount of default interest. He has notified me that he will not be able to pay the loan on the 90 day due date. So he will be in default.
- If i seek a personal judgement, could i seek the continued 10% a month on the unpaid balance until loan is paid off?
-Because the property was bought under a Trust, could i attach the lien to the property although it is a personal judgement, because the loan list the properties address? Although his company not he would be the beneficiary of the trust
-If i cannot continue to charge 10% on the loan, what is the typical amount of interest an illinois court will award on a personal judgement?
I realize this is a longer question. I thank you in advance for your answers
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Legalease replied 1 year ago.

Hello there --

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Has he given you any indication of when he might be able to pay you anything? Or if he might be able to pay you anything?

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MARY

Customer: replied 1 year ago.
He has not given an indication of when he will be able to pay. He thinks is may take 3 more months, but says he doesn't want to give me anything firm. He has the ability to pay the loan back in full now, just doesn't want to touch other funds, offered to pay small amount of interest less than a thousand dollars extra at time he can repay loan, but gave no date and no exact amount
Customer: replied 1 year ago.
meant to say less than a thousand dollars extra when he can repay loan from funds from closing. As noted he has money to repay loan now, just doesn't want to
Expert:  Legalease replied 1 year ago.

Hello there --

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I asked only because I was concerned about the possibility of a bankruptcy filing (which would wipe out your personal loan).

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To answer your questions, you can seek the amount in your contract from the filing date through the judgment date at which point the interest rate becomes 9 percent per year on the judgment. Unfortunately, it appears that the rate of interest you are charging in your loan agreement may be a violation of the Illinois Interest Act, which sets the maximum rate of interest for personal loans at 9 percent (there are exceptions for contracts regarding mortgages and/or contracts with local savings banks, but for the most part all personal loans are capped at 9 percent per year). So, while the court may enforce the underlying obligation to return the principal balance of the loan, the court may in its discretion, lower the interest rate in your deal to the 9 percent per year. I am providing you links to the operative statutes below so that you can review them and also an article on Usury in Illinois.

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Regarding your question about attaching property at this point -- if that was not part of the transaction then you are not permitted to place a lien on the property. However, once you receive a judgment from the court that he is not able to pay to you, you can ask for a judgment lien on any real estate that he owns personally (unfortunately, if the loan does not extend to the trust then you will not be permitted to place a lien on property owned by the trust unless the borrower permits it to happen).

-http://www.usurylaw.com/state/illinois.php

-The Illinois judgment interest act -

http://codes.lp.findlaw.com/ilstatutes/735/5/II/2-1303

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The Illinois Interest Act (for setting interest rates at the start of the loan arrangement)

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2322&ChapterID=67

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I hope that helps. Please let me know if you have any further questions. If not, can you please press a positive rating above in the star rating section before leaving the website. I am paid nothing unless you press the middle star or the fourth or fifth star on the right of the middle star. Doing so will not cost you any additional money -- it simply acts as the trigger to Just Answer to pay me for my time assisting you today. THANK YOU VERY MUCH

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MARY

Expert:  Legalease replied 1 year ago.

Hello again --

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