Elk Grove, CA – Is there something in the water or are California judges becoming as bizarre as the cases that they are handling? In the latest of questionable court rulings, a judge ruled out a default judgment against Rapper Mack 10 (real name Dedrick Rolison) for a debt that the owed. In the said judgment, the rapper has to fork over the principal amount owed plus the interests earned.
Well, this would seem a run-of-the mill creditor-debtor case, but, it turns out it is kind of insane that the judge did not consider some factors. According to court documents, Rapper Mack 10 borrowed money from a certain Tadayuki Ito back in April 24, 2010. The amount borrowed was $35,000 but hear this, according to their agreement, he was supposed to pay back the money on August 31, 2010 with interest, all in all amounting to $70,000. Three months at 100% interest. It was said that Mack then borrowed another $65,000 and had promised to pay $130,000 by September of 2011.That is where the judge failed big time.
Mack 10 may indeed have promised to pay back those amounts and is guilty of skipping on the payment but the creditor has clearly violated the California Usury Law. Under the California Usury Law, creditors are prohibited from charging more than 10% interest per year against their debtors (this law only covers non-exempt loans). It is puzzling why the judge did not act upon this violation. In California, “loan sharking” is a felony and carries with it harsh civil penalties and also jail time of up to 5 years.
If a creditor is guilty of issuing out a “usurious loan” (a loan with an exorbitant interest), consequences maybe as follows:
– All interests pertaining to the debt will be considered void. Thus, the debtor/borrower does not have to pay a single cent when it comes to interest.
– The creditor will end up paying the debtor three times the amount of interest that had been collected the year prior to the debtor suing (the debtor can sue on the grounds that it was a usurious loan but this ruling may depend on the court’s discretion)
– Jail time up to 5 years if found guilty of “loan sharking.”
Even if Mack 10 had good faith to pay back the debt, it would have been difficult with that kind of interest. He may have been desperate for a loan at the time, a possibility on why he agreed on the illegal terms of the debt. More baffling, the judge not looking into the terms of the contract and just agreeing that since the debtor did not show up in court, he can issue out a default judgment even though the loan contract is a violation of the California Usury law.
Consumers be aware, for non-exempt loans, debtors can only charge a maximum of 10% interest per annum but this does not apply to loans granted by financial institutions (loan associations, banks, savings and credit unions) and California-licensed real estate brokers. Come to think of it, the California Usury Law doesn’t seem to give that much consumer protection even though it carries harsh penalties. As Bart Simpson said, “Damned if you do, damned if you don’t.”
Know your rights as a consumer and visit the Thomas Hogan Law Office. We have 9 locations in Northern California. Don’t be a victim of unscrupulous creditors.