What is the process to suing someone who has defaulted on a personal loan?

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What is the process to suing someone who has defaulted on a personal loan?

Per the promissory note after a payment is 15 days late there is a 10% late fee added. The last payment was due 4 months ago. Can I keep adding a 10% late fee every month the balance is not paid? Are there other fees or financials I can include in the suit? Can I sue for lost opportunity costs or other amounts as well?

Asked on May 1, 2012 under Bankruptcy Law, South Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

1) Late fees or interest--you can charge whatever fees or interest rate is stated in the note, as per its terms, you cannot add other or additional fees not in the note. If a fee is stated as a 10% late for each late payment, then each time payment was due and was not paid on time, that appropriate fee could be added to that payment--at least, that would be the most common application. However, you need to read the note carefully, since its terms will control; if you have trouble understanding the note, bring it to an attorney to review.

2) Other fees or financials--as mentioned above, you can only sue for what the note itself entitles you to get; the promissory note is a contract, and you are entitled to everything in it--and nothing which was not in it and which the borrower had not agreed to.

3) No, you cannot sue for opportunity costs; those costs are too speculative to be recoverable, and also are not directly caused by the failure to repay, since even if you had been paid on time, what you could have or would have done with the money depends on your actions or choices, not the borrower's. What you can sue to recover, in any lawsuit, costs are damages which are proximally caused by the defendant's actions, not  by someone else's (including your) intervening or supervening choices, decisions, or actions; and you can only sue for damages which can be proven to a sufficient degree of certainty.


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