Legal Question in Credit and Debt Law in Maryland
I borrowed money from a friend with interest.Some of my payments in checked were bounced nut I paid them regularly after that. With my compuations, I already paid but according to her I still owe the principal amount.I borrowed $ 4000 from her and I paid her almost $ 7500 already. To my amazement I still owe her $ 7700. So if I will add $ 7500 and $ 7700 = $15200 .Is this legal ? We did not sign any contract. I did not receive any receipts from her. What shall I do ? Please do help me.
1 Answer from Attorneys
To answer your question, an attorney would need to know at a bare minimum when you borrowed the money and at what interest rate. In Maryland, the legal rate of interest is 6% (note that there are many exceptions and many creditors that can legally charge a higher rate). Once you have a basic idea of the date and interest rate, it would be a very good idea to run a basic loan amortization schedule. For instance, borrowing $4000 and paying it off over 10 years with interest will involve significantly greater payments over the life of the loan than say borrowing the same amount and paying it off over 3 years.
I strongly encourage people to put loan details in writing before ever borrowing money to avoid the kind of problems you now face. While verbal contracts can be legally binding, the lending party may find it difficult to enforce claims from a verbal contract in court. In any event, you may want to hunt down copies of all canceled checks so that you have a clear record of payments you made. A simple letter describing the payments you made and attaching the amortization schedule may possibly help clear up any disagreements.