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  1. #1
    Join Date
    Jun 2019
    Location
    Texas
    Posts
    1

    Default Private Party Loan with Collateral

    My question involves collection proceedings in the State of: Texas

    I'm not sure if I selected the right category and I'm sorry if I didn't.

    My husband and I signed a contract with a friend of ours who loaned us the money to buy a car and to buy a few other things that we needed to make a living. We put up two cars and my husband's tools.

    We have been paying on the note for 2 years. The note says that we will pay interest and it includes an amortization sheet. A few months ago our friend passed away and his (we call her "wife" but they were not married) is now handling the note. The loan was for 3 years. My question is this, if for some reason we cannot continue to make the payment, will we have to forfeit all the collateral? The note is more than half paid. In my thinking, if we just gave the "estate" one of the vehicles which is valued at more than the total balance we should be even.

    Am I thinking incorrectly? I would not think it's fair if we had to give up all of the security since the value of both cars and the other things are valued at far more than the note ever was to begin with.

    Also, the new person handling the note claims that we have to pay a per diem of interest instead of monthly and that we owe more interest. The contract does not state a per diem interest rate and there is no late payment penalties.

    I'd just like to know where I stand with the law on this so that I am prepared when she comes to create issues.

    Thank you for any help you can give me

  2. #2
    Join Date
    Jan 2006
    Posts
    38,727

    Default Re: Private Party Loan with Collateral

    You would have to forfeit whatever collateral is rewuired to compensate the lender a like amount of what you owe. You can try to negotiate a settlement such as you have described. They may be receptive since they have to wait out the term of the contract for a final pay off if they don’t.

    the estate is under no obligation to accept some or all of the collateral to settle the loan if they choose not to.

  3. #3
    Join Date
    Mar 2013
    Posts
    17,060

    Default Re: Private Party Loan with Collateral

    Quote Quoting tx-filly
    View Post

    if for some reason we cannot continue to make the payment, will we have to forfeit all the collateral?
    Conceivably. All of the collateral is pledged for one loan. Default and it's up to the creditor, not you.

    Quote Quoting tx-filly
    View Post
    The note is more than half paid. In my thinking, if we just gave the "estate" one of the vehicles which is valued at more than the total balance we should be even.

    Am I thinking incorrectly?
    Yes.

    Quote Quoting tx-filly
    View Post

    I would not think it's fair if we had to give up all of the security since the value of both cars and the other things are valued at far more than the note ever was to begin with.
    Fair is where you go on rides and eat cotton candy. You have a contract. You're bound by it. You have to live with the decision you made at the beginning.

    Quote Quoting tx-filly
    View Post

    Also, the new person handling the note claims that we have to pay a per diem of interest instead of monthly and that we owe more interest. The contract does not state a per diem interest rate and there is no late payment penalties.
    For that you can tell her to pound sand. You pay monthly according to the amortization schedule. That's all you owe.

    By the way, continue to make your payments but make your checks payable "To the Estate of __________." That's important.

  4. #4
    Join Date
    Jul 2018
    Posts
    1,544

    Default Re: Private Party Loan with Collateral

    Quote Quoting tx-filly
    View Post
    My husband and I signed a contract with a friend of ours who loaned us the money to buy a car and to buy a few other things that we needed to make a living. We put up two cars and my husband's tools.
    Please describe how you "put up" the cars and tools and how this was documented.


    Quote Quoting tx-filly
    View Post
    if for some reason we cannot continue to make the payment, will we have to forfeit all the collateral?
    Probably not, but it's impossible to answer this question without the answer to the question I asked above and without reading the loan contract and related documentation.


    Quote Quoting tx-filly
    View Post
    In my thinking, if we just gave the "estate" one of the vehicles which is valued at more than the total balance we should be even.
    If the vehicle is worth more than the loan balance, then you would not be "even."


    Quote Quoting tx-filly
    View Post
    the new person handling the note claims that we have to pay a per diem of interest instead of monthly and that we owe more interest. The contract does not state a per diem interest rate and there is no late payment penalties.
    Who is this "new person"?

    Quote Quoting jk
    View Post
    You would have to forfeit whatever collateral is rewuired to compensate the lender a like amount of what you owe.
    This is true, but only if the lender properly perfected a security interest in the collateral. It's entirely possible that the "putting up" of collateral by the OP was completely meaningless.

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