Recent Jurisprudence – Penalty Interest and Usury in Loans

October 19, 2015
Recent Jurisprudence – Penalty Interest and Usury in Loans

Recent Jurisprudence – Penalty Interest and Usury in Loans by Adrian Salgado

The Third Collegiate Court on Civil Matters of the Sixth Circuit recently issued legal opinion number XVI.3o.C. J/1 (10a.) titled: “Usury. Penalty Interest is Not Considered Usury. Such legal opinion held that “penalty interest is not considered usury to the detriment of debtor because such is freely agreed to in terms of article 174 of the General Law of Negotiable Instruments and Credit Transactions.” The foregoing follows the decision by the First Chamber of the Supreme Court of Justice of the Nation in the sense that the distinctive feature of usury is that a person obtains, in their own interest and in an abusive manner, excessive interest on a loan over the property of another, which the Third Collegiate Court determined is not the case with respect to penalty interest.

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