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1/25/2018 7:38:29 AM
Posted: 5/14/2002 6:22:24 AM EST
On June 6, 2000 I made an investment with a "friend" of mine in the amount of $3000. The deal was that he would give me $3600 after 30 days. He is in the house restoration and construction business, and needed to buy some tools for a big job he was doing. Well, two years later, he still hasn't paid me back. I've asked several times, and he gives me these bullshit answers...waiting for my home equity loan (8 months), etc. I'm tired of it, and want to know if I have a leg to stand on in court. Here is what we drafted and signed:
Investment Policy Name: Chimborazo Address: ********* Date: 6/6/2000 The above named person has invested an amount of $3000.00 into ****** Restoration and Construction, LLC. This investment to be used as working capital will return an interest rate of 20% over the period of 30 working days to the above named person. At the end of said 30 days the investment of $3000 can be re-invested at an interest reate to be determined at that date. This investment gives above said investor no ownership rights to ******* Restoration and Construction, LLC. As a "silent" investor any profit accrued from said investment will be limited to above stated interest. Signed: [i]Mr. Non-paying Dickhead's name and signature[/i] Date: 6/6/2000 [i]Chimborazo's name and signature[/i] Date 6/6/2000
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Well what do you think? Will this hold up in court? Thanks, Chimborazo
Link Posted: 5/14/2002 6:31:18 AM EST
[Last Edit: 5/14/2002 6:33:48 AM EST by eswanson]
Link Posted: 5/14/2002 6:42:04 AM EST
i'd agree with everything eswanson said on the surface, with the HUGE caveat that [b][size=4]you really need to consult a lawyer[/size=4][/b]. there's no excuse not to. how can you bitch about a couple of hundred dollars that it might cost you to get $3600 back. at least you got it in writing. there are a couple of dozen other details that could render the contract void, voidable, or unenforcable (depending on the nature of the detail). you need to talk to a lawyer. you don't necessarily need one to represent you in court.
Link Posted: 5/14/2002 7:13:55 AM EST
This investment to be used as working capital will return an interest rate of 20% over the period of 30 working days to the above named person.
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You might want to check your state laws on interest rates. Twenty percent interest over thirty days equals about 240% per year and might be considered usurious in your state. That would make it an illegal , and thus unenforceable, contract. In the future you might want to phrase it as a $555 "handling charge" plus 1.5% per month, i.e., $45 on $3000, for a total of $600 return on your money. I'M NOT A LAWYER, so check all this out. Good luck!
Link Posted: 5/14/2002 7:22:40 AM EST
As hardcase said, you have probably violated usery laws with the interest rate. HOWEVER, you can still recover the principal in small claims court. Also, getting a judgement isn't the same as getting your money. You still have to expend a lot of effort to actually collect on that judgement and that may end up costing you more than $3k in time and cost, if you are even successful. Absolutely consult a lawyer if you can do so for free. He will probably tell you that it will cost you more to collect than to just eat it though. Hey, go on Judge Judy![;D]
Link Posted: 5/14/2002 7:41:30 AM EST
Sorry to hear about the misfortune Chimborazo. Hope it get worked out. Good luck.
Link Posted: 5/14/2002 9:13:02 AM EST
Thanks for all the replies. [b]eswanson[/b], the money was not reinvested after the thirty days. Another agreement was never drafted...he just failed to pay me back. Your consulting fee check is in the mail.[:D] [b]hardcase[/b] and [b]FMJunkie[/b], I hadn't thought about that. It probably is illegal. Does that mean that I'm not even entitled to get my initial investment of $3000 back?[V] [b]ARLady[/b], I think I will consult a lawyer. I called him again today and if he doesn't call me back, I'll get a lawyer to look at the situation. [b]satcong[/b], thanks for the kind words. Again, thanks for the advice everybody. -Chimborazo
Link Posted: 5/14/2002 9:47:55 AM EST
Originally Posted By Chimborazo: [b]ARLady[/b], I think I will consult a lawyer. I called him again today and if he doesn't call me back, I'll get a lawyer to look at the situation.
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i wanna apologize for the uppity tone in my first part about consulting the lawyer. didn't mean to come across that way. just read it again and realized that i hate the internet cuz it can't convey tone of voice. hope i didn't irk you.
Link Posted: 5/14/2002 10:00:40 AM EST
[Last Edit: 5/14/2002 10:01:43 AM EST by slefelar]
I used to do some collection work when I practiced in Chicago, so I have some idea of what you need to do. Frankly, the only way this is going to be worth it to you is if you do it yourself. You are not going to get back your attorney fees, win or lose. I suspect that your "friend" does not have the money, or he would pay you back. Thus, even if you get a judgment, you still have to collect. This can be difficult unless he has money sitting in a bank account that can be garnished. Instead, you will have to foreclose and sell his property (tools, cars). In all liklihood he will come up with the money once you make his life difficult. Your written agreement should be enforceable (at least the principal amount). Feel free to e-mail me if you need help. slefelar@millisor.com
Link Posted: 5/14/2002 10:08:29 AM EST
ARLady, not at all. Besides, I could use a little kick in the ass over this thing! BTW, another congrats to you on your real estate exam!! slefelar, how does one foreclose on property without a legal judgement? You think I should just hardball him until he pays up? It really burns me up when I see him and his wife out drinking. They go out EVERY NIGHT!! People I know mention it in passing (nobody knows he owes me money). Thanks again.
Link Posted: 5/14/2002 10:13:58 AM EST
Link Posted: 5/14/2002 10:45:58 AM EST
Here in Californistan a case that small could be handled in Small Claims Court, in which people rarely use attorneys. Filing is brain-dead simple, and the judges and clerks will bend over backwards to help the winner collect. Is there a similar system in VA?
Link Posted: 5/14/2002 10:57:27 AM EST
Here's another vote for Small Claims Court and no lawyer. Get a book on filling, it will give you all the info you need. Ask for the total amount, after the guy is served offer to accept just the principal if he pays before the court date, he may jump on that. If you have to go to court you probably won't get the interest anyway. Be sure to check on the statute of limitations, you want to file before it ends. As for the legality of the contract, it's small claims. Basically they will determine if there was an agreement and if he is in default. They won't tear your contract apart and jump on the "loan shark" fee if you can state you offered to accept just the principal. The judge will either reduce the owed interest, throw it out all together, or say $600 is fair for a $3,000 debt over the course of two years. You have an excellent case for small claims. I would hope the filing would prod the guy into paying before the court date, less hassle. If he doesn't I'll be surprised if you don't win but you will have to probably file a lean on his company, house or something. There is also a way to sieze any company property such as tools and sell them to get your money back. If you get more than what you are owed you have to return the extra $.
Link Posted: 5/14/2002 11:35:10 AM EST
If you are still on semi-decent terms with this mooch, just go to his house and have a few beers (which you will probably have to bring). Lift his car keys and drive his car/truck/whatever away. Offer to let him have it back for the $3000 he owes you. Now THAT'S hardball. A little bit anyway.
Link Posted: 5/14/2002 1:40:50 PM EST
It looks like you made a very good investment, indeed!! Since your "friend" failed to pay you after the first 30 day period, we can assume that he merely rolled over the the principal and interest at the same rate. That means as of May 6, 2002, your "friend" owes you $198,742.11. On June 6 the total will be $238,490.54. My advice is get a lawyer and take this guys house, and everything else he owns!!
Link Posted: 5/14/2002 3:40:28 PM EST
Regarding collection problems: Look into filing a lien against the specific house he was renovating or other houses where he has used the equipment you help pay for.
Link Posted: 5/14/2002 3:43:28 PM EST
Link Posted: 5/14/2002 3:47:56 PM EST
About the "usurious" interest rate - whose idea was it? If it was yours, then it can be very easily taken as usury. If it was his (offered freely) then you can probably make it happen. Somehow, tho, I have a hard time believing that usury statues can apply to a contract entered willingly... Stupid question - is it signed AND notarised? Just signed, both parties? Just a paper with no sigs? Just wondering... It does otherwise sound like a Small Claims case. If you get it to court (and win!) I would also look for lien authority so you would have a second course of action in the event of non-payment (which seems to be more common than one might think...) I am not a lawyer - don't even play one on TV! Take this "advice" in the spirit in which it is offered... FFZ
Link Posted: 5/14/2002 5:43:16 PM EST
Consult an attorney and then small claims court. You should be able to get a judgement. Then you can put a lein on his vehicle/other tangible property that he might want to sell in the near future. If you have a judgment and know where he banks, you can have funds seized. If he works as an employee for another business, you can have a garnish done. Another angle that is a little more devious but seems legal is this - if he doesn't pay/won't pay/can't pay, tell him that you are going to forgive the debt and show it on your income tax and report it to the IRS. They WILL expect him to pay taxes on this. This is an angle that some businesses are using to make the deadbeats pay up. They'd rather pay the debt than deal with the IRS. Good Luck.
Link Posted: 5/15/2002 4:59:37 AM EST
Thanks for the replies everyone. The whole thing (amount of money, rate, time period, etc.) was his idea. He approached me about it. As for the contract, we both signed it, but it is not notarized. I like the IRS idea if he doesn't pay. Thanks again.
Link Posted: 5/15/2002 5:47:34 AM EST
hardcase and FMJunkie, I hadn't thought about that. It probably is illegal. Does that mean that I'm not even entitled to get my initial investment of $3000 back?
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It MAY mean that you cannot get your principal back either, if the usury laws are interpreted strictly, but if you go to Small Claims court the judge may overlook it. Again, I'm not a lawyer, but it seems like judges are trying to be fair in these things. Here's another idea: Approach your "friend" & propose a payment program of $300 on the first of each month with a good faith first payment of $600. Give him a few days to think about it & call him if he does not get back to you. If he blows you off again, then file. You might even want to charge him interest for the two years that he is over due & the amount of time that it takes to pay off the debt, maybe 1.5% per month on the outstanding balance. Be sure to apply the payments to the interest charge first. Example: $3600 X .015 = $54 interest $300 - 54 = $246 toward principal Of course the original $3600 at 18%/year (1.5%/ month) would be over $5000 right now. Another idea: Go to the bar that he frequents & sit directly across the bar from him & rub your thumb & index finger together periodically. You know, like you see in the movies. Be a minor PITA.
Link Posted: 5/15/2002 6:31:55 AM EST
I don't know your laws, but I suspect that the interest won't hold up. The pro per filing is a good idea, your case is fairly simple and you should be okay. Even better would be to go to a local attorney and offer him two or three hundred to sue and skip discovery. Something else you may want to do is if he used the 3k to buy any equipment you should do a UCC filing with the state. That will put you in position one or two for a claim on that stuff when he goes down the drain.
Link Posted: 5/15/2002 6:41:30 AM EST
I do these agreements for business deals all the time. The promissary notes end up being 5-6 pages, plus personal guarantees on the deal of another few pages, plus a mortgage and/or security interest for another 5-10 pages, plus I have been sneaking in a confession of judgment with some folks on the other side. You should have a stack of papers numbering at least 20 pages whenever you loan money. Otherwise you will be the loser.
Link Posted: 5/15/2002 11:38:19 AM EST
Well, I finally talked to the guy today, and he said his van was broken into and a lot of tools were stolen. He said the insurance check should come tomorrow or Friday, so I may get some money. I say "may" because he has been full of shit thus far. I told him he had until the end of the month to pay me in full before I filed. Just wanted to let him know I was serious about this. In the meantime I'm going to consult a lawyer. Thanks for all the advice. I hope I get my money soon.
Link Posted: 5/15/2002 11:55:44 AM EST
[Last Edit: 5/15/2002 11:57:41 AM EST by Aimless]
Link Posted: 5/15/2002 12:41:26 PM EST
Sorry if I wasn't clear on my first post. You need a judgment before you can garnish/sheriffs sale, etc. My point was paying a lawyer to get a $3000 judgment that may be worthless or uncolectable does not make sense. You can get the judgment yourself. Collecting is the hard part. If you can find out where he has his checking account, you will be way ahead of the game.
Link Posted: 7/29/2002 11:12:29 AM EST
Well, the lawyer that did my house closing said he would do it for 1/3, with no up front costs. If he gets nothing, the only thing I can lose is the court costs...$24. Is one-third reasonable? So if I get the full amount ($3600), then he gets $1200. Can I take him to small claims after that to try and recover my legal fees? I forgot to ask my lawyer. Thanks, Chimborazo
Link Posted: 7/29/2002 11:44:06 AM EST
Ha!! Speak of the devil. The bastard just called me. The money's just around the corner, as always. I didn't tell him I'm suing him though. He's faxing me his home equity line papers tonight (so he says). I figure this will give me more info to pass to the lawyer when he inevitably calls me with an excuse next week. What a loser.
Link Posted: 7/29/2002 1:29:20 PM EST
Sounds like a good deal. Make sure that the costs come out of his end. Motions and writs also cost money. Ask if he will go 25% before you agree, it can't hurt to ask. Unless your state's law is very different, you can't recover attorney's fees unless there is a provision for them in the note.
Link Posted: 7/29/2002 1:44:14 PM EST
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