• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Collecting a Debt Across State Lines

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

Ananisapta

Junior Member
I live in NC and my brother lives in PA. His residence is probably more relevant than mine to this issue.

He was doing well until about a decade ago, when something bad he'd done a decade previously caught up with him and he caught a felony conviction and a couple of years in jail. Released on parole, his old career was closed to him and his criminal record made it difficult for him to find anything comparable. To tide him over, I lent him $7500 on an unsecured demand loan with a low interest rate.

Over the past five years, he's had some work, but recently that went away so he's trying to start his own business. His only asset is a house worth about $120K, on which he owes $60K. He's made no payment on his loan until I threatened to call it this summer. Since then, he's made one payment of $100. This would cover his interest obligation for about five months. His current obligation to me is a little over $8000.

I'm retired, so the money I lent my brother came from my IRA. I had to pay tax on it, and it would have grown substantially if I'd left it in the account. My brother is close to retirement age and has no dependent child or spouse. I have a spouse who is also retired and will rely on my IRA when I'm gone, so I'd like to get that money back for her sake.

Given the circumstances, I'd feel a lot better if I had a lien on his house. I'm looking for ideas on how I could ratchet up the pressure on my brother without spending a lot more in legal fees. The text of the loan agreement we signed is below.

****************************************************************************************************************************

LOAN AGREEMENT

THIS LOAN AGREEMENT (this "Agreement") dated this _______ day of ______________, _______
BETWEEN:
[names redacted]
(the "Lender")
OF THE FIRST PART
AND
[name redacted]
(the "Borrower")
OF THE SECOND PART

IN CONSIDERATION OF the Lender loaning certain monies (the "Loan") to the Borrower, and the
Borrower repaying the Loan to the Lender, both parties agree to keep, perform and fulfill the promises and
conditions set out in this Agreement:
Loan Amount & Interest

1. The Lender promises to loan $20,000.00 USD to the Borrower and the Borrower promises to repay
this principal amount to the Lender, at such address as may be provided in writing, with interest
payable on the unpaid principal at the rate of 2.55 percent per annum, calculated monthly not in
advance.
Payment

2. This Loan is repayable within 30 day(s) of the Lender providing the Borrower with written notice of
demand.
Default

3. Notwithstanding anything to the contrary in this Agreement, if the Borrower defaults in the
performance of any obligation under this Agreement, then the Lender may declare the principal
amount owing and interest due under this Agreement at that time to be immediately due and payable.
Additional Clauses

4. Interest rate will vary from month to month with the current rate for US Treasury 10-year bonds as
posted at http://online.wsj.com/mdc/public/page/2_3020-keyinrates.html?mod=topnav_2_3023.

5. Principal amounts shall be disbursed upon request when approved by lender, and may be repaid at
any time by borrower subject to lender's right to demand repayment with 30-day written notice.
Governing Law

6. This Agreement will be construed in accordance with and governed by the laws of the State of North
Carolina.
Costs

7. All costs, expenses and expenditures including, without limitation, the complete legal costs incurred
by enforcing this Agreement as a result of any default by the Borrower, will be added to the principal
then outstanding and will immediately be paid by the Borrower.
Binding Effect

8. This Agreement will pass to the benefit of and be binding upon the respective heirs, executors,
administrators, successors and permitted assigns of the Borrower and Lender. The Borrower waives
presentment for payment, notice of non-payment, protest, and notice of protest.
Amendments

9. This Agreement may only be amended or modified by a written instrument executed by both the
Borrower and the Lender.
Severability

10. The clauses and paragraphs contained in this Agreement are intended to be read and construed
independently of each other. If any term, covenant, condition or provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that
such provision be reduced in scope by the court only to the extent deemed necessary by that court to
render the provision reasonable and enforceable and the remainder of the provisions of this
Agreement will in no way be affected, impaired or invalidated as a result.
General Provisions

11. Headings are inserted for the convenience of the parties only and are not to be considered when
interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words
in the masculine mean and include the feminine and vice versa.
Entire Agreement

12. This Agreement constitutes the entire agreement between the parties and there are no further items or
provisions, either oral or otherwise.

IN WITNESS WHEREOF, the parties have duly affixed their signatures under hand and seal on this
_______ day of ______________, _______.
SIGNED, SEALED, AND DELIVERED
this _______ day of ______________, _______ in
front of the person below who is over 18 years of age
and not involved with the contents of this document
or related to any of the parties in this document.
[signatures redacted]
 


PayrollHRGuy

Senior Member
Which is it? You wrote that you loaned him $7500, the loan states $20000.

It makes a difference because in PA the max for small claims court is $12K.

And likely the only way you are going to get a lien is to sue and get a judgment.
 

HRZ

Senior Member
You are ultra lucky he made a recent payment ; the statute of limitations in PA is 4 years on debt .

You will ned to sue in PA. It is ultra easy for him to appeal your almost certain win in DJ court to court of common pleas. GIven your language as to he pays costs if he loses, you might better consider PA lawyer and go to Common pleas court ....still no assurance you can squeeze money out of a stone .
 

adjusterjack

Senior Member
Given the circumstances, I'd feel a lot better if I had a lien on his house.
He's already in default. Good luck getting him to sign one.

I'm looking for ideas on how I could ratchet up the pressure on my brother without spending a lot more in legal fees.
That ship sailed long ago.

You either sue him or you don't. Either way, as HRZ noted, you can't get money from somebody who doesn't have any. A judgment can become a lien on his home so you might end up getting paid if he sells it.
 

HRZ

Senior Member
You cannot attach his wages (if any) in PA . If he goes bankrupt your claim probably gets wiped out . A second lien on his home if there are not already 5 others ahead of you , is better than nothing ...but who knows when or if that ever gets paid .

IF you can rattle chains and jawbone money out of him..get started today!
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top