Legal Question in Business Law in Ohio

Re: verbal contracts

Dear Inquirer:

Your loan to a friend, or even a relative, is an unsecured loan.

By definition, unsecured loans are not �collateralized�, i.e. they are not attached to, or are not secured by, any collateral to guarantee repayment. Such loans are unsecured because upon default of the borrower, the lender has nothing to prove the loan, such as a writing or promissory note, and nothing to attach even upon suit.

In most states, the lender may not attach the borrower�s real or personal property. Unlike a mortgage, where the real property is the guarantee or collateral, there is no such guarantee in unsecured loans.

Lenders assume certain risks in making unsecured loans; they do so only upon ascertaining that the borrower has a good credit rating. Borrowers, upon becoming debtors, risk destroying any good credit scores upon default.

With unsecured loans, the lender assumes the risk, and it is, at best, a calculated and experienced one.

You may now procveed to file your suit in the Small claims Court of your city or jurisdiction and hope you'll recover, but will lose a friend (or relative) in the process.

Good luck.

Sincerely, J. Norman Stark