Loaned my boss $15k, now she won't pay me back

[quincy]

Okay thank you for clearing that up for me. And yes I do have extensive screenshots of messages from our business app, where she is clearly asking me for the money and I'm agreeing to it, then her sending me the wire transfer info, and then me letting her know I sent it. I have print outs of my bank statement showing the money was sent, and the original copy of the wire transfer paperwork. I consulted with 2 different attorneys who both said I have a solid case and that my screenshots will hold up. One concern I do have is that I didn't send it to her personal account directly, I sent it to her business account which was an LLC and that business no longer exists. Not sure if this will pose a problem, but my lawyers didn't think it would.

If you have lawyers, you should rely on their advice and direction. They have access to all of the facts and evidence not available to us.

Good luck.

 

[Zigner]

Do you have evidence to support the $15,000 loan?

It is not illegal to not sue for the full amount of a loan so you can keep the suit in small claims, and it is not illegal to not charge or not collect interest on a personal loan.

The fact that the usurious interest was a part of the loan may invalidate the loan from the outset.* If that's the case, then choosing not to collect the interest doesn't change the fact that the loan is no longer valid.


*It really depends on the state's treatment of usurious loans.

 

[quincy]

The fact that the usurious interest was a part of the loan may invalidate the loan from the outset.* If that's the case, then choosing not to collect the interest doesn't change the fact that the loan is no longer valid.


*It really depends on the state's treatment of usurious loans.

Pennsylvania’s laws on usury, and remedies and penalties for usury and excess charges:

41 Pa Stat 201: https://casetext.com/statute/pennsylvania-statutes/statutes-unconsolidated/title-41-ps-interest/maximum-interest-rates/article-ii-maximum-lawful-interest-rate/section-201-maximum-lawful-interest-rate

41 Pa Stat 502:
https://casetext.com/statute/pennsylvania-statutes/statutes-unconsolidated/title-41-ps-interest/maximum-interest-rates/article-v-remedies-and-penalties/section-502-usury-and-excess-charges-recoverable

Pennsylvania is one of the states that allow for courts to alter or modify unenforceable or unreasonable parts of a contract (known as “blue penciling) rather than voiding the entire contract. It is therefore possible that a court in Pennsylvania would not void a loan document over the interest rate but rather eliminate the unreasonable/usurious part of the contract. This seems a reasonable possibility seeing as how no money at all has yet been collected.

 

[cmiller633]

Pennsylvania’s laws on usury, and remedies and penalties for usury and excess charges:

41 Pa Stat 201: https://casetext.com/statute/pennsylvania-statutes/statutes-unconsolidated/title-41-ps-interest/maximum-interest-rates/article-ii-maximum-lawful-interest-rate/section-201-maximum-lawful-interest-rate

41 Pa Stat 502:
https://casetext.com/statute/pennsylvania-statutes/statutes-unconsolidated/title-41-ps-interest/maximum-interest-rates/article-v-remedies-and-penalties/section-502-usury-and-excess-charges-recoverable

Pennsylvania is one of the states that allow for courts to alter or modify unenforceable or unreasonable parts of a contract (known as “blue penciling) rather than voiding the entire contract. It is therefore possible that a court in Pennsylvania would not void a loan document over the interest rate but rather eliminate the unreasonable/usurious part of the contract. This seems a reasonable possibility seeing as how no money at all has yet been collected.

Thank you for looking into this, it's definitely something I've been concerned about and I really appreciate the articles and information. I should've done my research before agreeing to the loan, and to be honest this entire time I thought she offered me such a high interest to entice me to say yes, and that may very well be true, but now I'm also thinking maybe she knew it was usury and that I wouldn't be able to sue for it, or that my suit would be thrown out completely because of it (if she didn't know the usury laws).

 

[quincy]

Thank you for looking into this, it's definitely something I've been concerned about and I really appreciate the articles and information. I should've done my research before agreeing to the loan, and to be honest this entire time I thought she offered me such a high interest to entice me to say yes, and that may very well be true, but now I'm also thinking maybe she knew it was usury and that I wouldn't be able to sue for it, or that my suit would be thrown out completely because of it (if she didn't know the usury laws).

I recommend you review the loan documents - all communications between you and your boss as they relate to the loan - with a lawyer in your area of Pennsylvania. The amount you are owed is significant enough to justify paying for a couple of hours of an attorney’s time.

Again, I believe you can sue for the original loan amount (or at least $12,000 worth of it) in small claims. Do not include interest in your lawsuit demand. Not asking for interest on the loan should not void the contract. Confirm this with the lawyer you see.

Good luck.

 

[Taxing Matters]

Again, I believe you can sue for the original loan amount (or at least $12,000 worth of it) in small claims. Do not include interest in your lawsuit demand. Not asking for interest on the loan should not void the contract. Confirm this with the lawyer you see.

Good luck.

I see no reason that would preclude going after interest on the loan. After all, regardless of how the case is plead, the IRS will likely impute interest anyway. In order to meet the $12k limit for small claims, the OP could reduce both some principal and interest. I agree that seeing a lawyer would be a good idea.

 

[quincy]

I see no reason that would preclude going after interest on the loan. After all, regardless of how the case is plead, the IRS will likely impute interest anyway. In order to meet the $12k limit for small claims, the OP could reduce both some principal and interest. I agree that seeing a lawyer would be a good idea.

For a small claims case, it seems to me to be easier to simply sue for $12,000 (of the $15,000 loan) and leave the interest amount unstated, especially since it is the interest on the original loan documents that could be problematic. Interest for tax purposes can be calculated later or, as you said, imputed by the IRS. Do you see a problem doing it this way?

This is, of course, assuming that there is a judgment and the judgment is actually collected/collectible.

An attorney in Pennsylvania can best advise.

 

[Taxing Matters]

Do you see a problem doing it this way?

No. I think both ways are likely to have the same outcome in the end. But you said:

Do not include interest in your lawsuit demand.

As you phrased it, it makes it sound like there is some kind of problem by including the interest. My point is that the OP can include interest, it's basically six of one or half a dozen of the other. Moreover, that kind of statement seems to me to come close to unauthorized practice of law. Telling someone specifically what to plead in a case is what lawyers do.

 

[quincy]

No. I think both ways are likely to have the same outcome in the end. But you said:



As you phrased it, it makes it sound like there is some kind of problem by including the interest. My point is that the OP can include interest, it's basically six of one or half a dozen of the other. Moreover, that kind of statement seems to me to come close to unauthorized practice of law. Telling someone specifically what to plead in a case is what lawyers do.

Ah. I thought my “confirm this with the lawyer you see” covered my advice adequately. I can see how you think differently.