Usury Law Not Applicable to Judgment Creditor’s Forebearance Agreement

  In consolidated appeals, and in a lengthy opinion in Bisno v. Kahn, the First Appellate District concludes that California’s usury law does not apply to a judgment creditor’s agreement to forbear collecting on a judgment. Held: “Because the usury law does not expressly prohibit a party from entering into an agreement to forbear collecting on a judgment, usury liability does not extend to judgment creditors who receive remuneration beyond the statutory 10 percent interest rate in exchange for a delay in enforcing a judgment.”

  However, “any forbearance fee does not become part of the judgment and is not an amount that must be paid to satisfy the judgment under the Enforcement of Judgments Law [citation omitted]. Rather, a forbearance agreement is a contract between the judgment creditor and the judgment debtor that is separate from the judgment to which it applies. Consequently, a forbearance agreement must be enforced in a separate contract action and is subject to standard contractual defenses such as duress and unconscionability.”


   Mr. Daymude consults with clients and accepts cases involving California’s usury law and cases to enforcement judgment. For other types of cases accepted, please scroll this page and visit My Practice page. If you are seeking a legal consultation or representation, call Michael Daymude at 818-971-9409.

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