Category Archives: Civil Usury

US District Court Holds Individual Guarantors Liable for Business Loan; Rejects Usury Challenge

An alternative small business lender provided a loan to a business located in Texas. The loan was guaranteed by two individuals.  The agreement contained a choice of law provision which provided that the transaction would be interpreted and governed by … Continue reading

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U.S. District Court Holds that Purchase of Future Settlement Proceeds Violates Kansas Usury Law

A litigation finance firm advanced funds to an individual that was pursuing a personal injury case against a gas can manufacturer. After receiving a series of cash advances, the individual filed suit against the financing firm in U.S. District Court alleging that the … Continue reading

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Citing Growing Body of Case Law, New York Court Finds Sale of Future Receivables is Not Subject to Usury Laws

A small business funder entered into an agreement with a business to purchase a portion of the business’ future receivables for an upfront lump sum. In exchange for the lump sum payment, the funder was to receive a portion of the … Continue reading

Posted in Civil Usury, Criminal Usury, Merchant Cash Advance, New York, Sale vs. Loan, State Court | Comments Off on Citing Growing Body of Case Law, New York Court Finds Sale of Future Receivables is Not Subject to Usury Laws

In Three Separate Decisions, New York Courts Find Sale of Future Receivables Not Subject to Usury Laws

In three nearly identical cases, a small business funder entered into an agreement with three separate businesses to purchase a portion of the businesses’ future receivables for an upfront lump sum. In exchange for the lump sum payment, the funder was … Continue reading

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New York Court Upholds Bar on Use of Usury Defense by Corporate Entity

A computer consultant asked a client for a loan. The client obliged but required a confession of judgment be included in the loan contract along with an increased interest rate in the event of default. The consultant agreed. The loan, … Continue reading

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New York Court Finds Sale of Future Receivables is Not Subject to Usury Laws

A small business funder entered into an agreement with a business to purchase a portion of the business’ future receivables for an upfront lump sum. In exchange for the lump sum payment, the funder was to receive 9% of the business’ … Continue reading

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Excessive Interest Caused By Contingency Under Debtor’s Control Not Usurious

A horse owner provided a loan to a horse trainer. The promissory note required simple interest payments of 4% per annum. The trainer had the option of providing free training for two of the owner’s horses in lieu of paying … Continue reading

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Bankruptcy Trustee Seeks to Recharacterize Litigation Financing Contract as Loan, Survives Motion to Dismiss

A litigation finance firm advanced funds to an attorney working a personal injury case on contingency. The attorney ultimately settled the case and was awarded a portion of the settlement as his fee. Following the settlement award, the attorney’s creditors, including the … Continue reading

Posted in Bankruptcy, Civil Usury, Federal Court, Recharacterization | Comments Off on Bankruptcy Trustee Seeks to Recharacterize Litigation Financing Contract as Loan, Survives Motion to Dismiss

Appellate Court Permits Use of Parol Evidence to Support Usury Defense

Two New York debtors entered into a promissory note with a lender in which the lender agreed to lend $35,000 to the debtors and the debtors promised to repay the lender $35,000 plus 15% interest. When the debtors failed to make … Continue reading

Posted in Civil Usury, New York, Parol Evidence, State Court, Usury Cap | Comments Off on Appellate Court Permits Use of Parol Evidence to Support Usury Defense

Court Finds Contract to Be Sale of Property Not Loan of Money, Usury Claim Rejected

A buyer purchased an apartment from a seller. The contract for deed required the buyer to make a down payment and 180 equal monthly payments of amortized principal and interest.  Following the last payment, title to the apartment would pass from … Continue reading

Posted in Civil Usury, Sale vs. Loan, State Court, Texas | Comments Off on Court Finds Contract to Be Sale of Property Not Loan of Money, Usury Claim Rejected