How To Prove A Tennessee Usury Claim
In Tennessee, a claim of Usury is defined as:
The charging of an illegal rate of interest as a condition to lending money. An illegally high rate of interest.
It simply means:
Charging an interest rate that is illegally high.
There are 4 elements of the claim:
- Element 1. A loan or forbearance occurred, either explicitly or implicitly. A loan or forbearance happens when a lender gives money to a borrower or allows them to delay payment, which can be a key factor in a usury claim if the interest charged exceeds legal limits.
Facts that might support this element look like:
* The borrower received a sum of money from the lender with an agreement to repay it over time, indicating a loan was made.
* The lender allowed the borrower to delay payments without formal documentation, suggesting an implicit forbearance agreement.
* The parties discussed repayment terms that included interest, demonstrating an understanding of a loan arrangement.
* The borrower made partial payments while the lender accepted them, indicating an acknowledgment of the loan’s existence.
* The lender provided additional funds to the borrower after the initial loan, implying a continuation of the lending relationship. - Element 2. The parties agreed that the principal would be repayable absolutely. In a usury claim, this means that both parties agreed that the main amount of money borrowed must be paid back in full, without any conditions or exceptions.
Facts that might support this element look like:
* The parties explicitly stated in their written agreement that the principal amount would be repaid in full without any conditions or contingencies.
* During negotiations, both parties acknowledged that the repayment of the principal was to occur regardless of any external circumstances.
* Testimony from both parties confirms that they understood the principal was to be repaid absolutely, with no exceptions.
* The loan documents clearly outline that the principal repayment was not subject to any performance or outcome-based conditions.
* Correspondence between the parties prior to the agreement reiterates their mutual understanding that the principal would be repayable in full. - Element 3. The lender exacted a greater profit than allowed by law. A lender charged more interest than the law permits, making their profit from the loan higher than what is legally allowed, which can lead to a usury claim against them.
Facts that might support this element look like:
* The lender charged an interest rate of 25%, significantly exceeding the state-mandated maximum of 15%.
* The loan agreement included hidden fees that effectively increased the total cost of borrowing beyond legal limits.
* The lender failed to disclose the true annual percentage rate (APR), misleading the borrower about the loan’s cost.
* The lender imposed penalties for late payments that were disproportionate and not justified by the terms of the loan.
* The lender engaged in predatory lending practices, targeting borrowers with poor credit to impose excessive interest rates. - Element 4. The lender intended to violate the law. In a usury claim, this element means that the lender knowingly set high interest rates or unfair terms, fully aware that their actions were against the law, showing a clear intention to exploit borrowers for profit.
Facts that might support this element look like:
* The lender consistently charged interest rates significantly above the legal limit, despite being aware of the applicable usury laws.
* Internal communications from the lender revealed a deliberate strategy to circumvent state usury regulations for increased profit.
* The lender failed to provide required disclosures about interest rates and fees, indicating a disregard for legal obligations.
* The lender has a history of legal violations related to usury, demonstrating a pattern of intentional misconduct.
* Testimonies from former employees indicate that the lender encouraged practices that knowingly violated usury laws.
(See Jenkins v. Dugger, 96 F. 2d 727 (U.S. Court of Appeals 6th Circuit 1938).)
If you’re in court without a lawyer and plan to assert a Claim of Usury, having a Personal Practice of Law at Courtroom5 is essential. You’ll need to make informed decisions about what to file at each phase of your case and prepare legal documents that are supported by thorough legal research and a strong analysis of the facts. Equip yourself with the tools and knowledge to effectively navigate your legal journey.
U.S. Civil Cases Only