Personal Loan Rights
I have an outstanding loan debt with a former employer for $5,000 of which I have paid $4,500 towards the loan (no interest). The loan was designed to be paid monthly in $300 increments. I have been late once and currently struggling to make the final payment of $500. I have reached out to him and have made it clear that I intend to pay, there is no doubt that I owe. My question surrounds harassment and what he is allowed to threaten. He has threatened to call my boss and garnish wages from me he has also asked a family member (a former employer at the same firm) to have him pay off the loan so he does not have to worry about it. He has written to my email at work although I have told him write to my gmail account. I would like to know my rights as far as harassment is concerned and what he potentially can do to me to recoup the loan -small claims, extra money in the way of damages etc...
1 Answer from Attorneys
Re: Personal Loan Rights
Let's start with what he can do. He can certainly sue you in small claims court. If you do not dispute the debt owed, then once he obtains a judgment, he can garnish wages, levy against bank accounts, and generally be very nasty. He cannot garnish wages or do any of this until he gets judgment. Generally, he won't be able to recover more than the $500 still owed, except he might suddenly develop a different recollection of the agreement you struck - i.e., he might suddenly remember that you agreed to pay him interest. If there is no written agreement, its going to come down to who the judge believes, and frankly, he's not super likely to believe that this guy loaned you money without getting any interest (I'm not saying I don't believe you, just what a judge might think). As for the threats at work, no matter what laws may (I say "may" because I'm not sure you can claim protection for this debt under the various consumer protection laws) protect you from his harassing tactics, it still won't stop him. The best bet is to either get him paid off, or reach some sort of acceptable agreement with him. Doesn't sound like the later is even possible, so you need to get rid of him as soon as possible. You might try telling him one of two things in writing - first, the Fair Debt Collection Practices Act prevents debt collectors from engaging in certain activities, such as calling a third party to discuss your debt, threatening you, etc...; second, you can let him know that calling your boss and/or continuing to use your company email will cause you to lose your job and then he will not get paid. Unfortunately, only the later is probably going to hold any water. As suggested above, if I were you, I would do whatever you can to get him paid off.
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