Illinois Law Protects Commercial Loan Lenders

 Posted on August 22, 2019 in Creditor's Rights

When creating a loan agreement in Illinois, there is a big difference between personal loans and commercial loans. Individuals or spouses take out personal loans in order to pay for family or household expenses – the most common example being home mortgages. Commercial loans are credit agreements made with business owners for the purpose of starting or expanding a business. In Illinois, commercial loans are more favorable to lenders than personal loans because of the Illinois Credit Agreements Act. Thus, making sure to classify a loan as a credit agreement could save you from a lengthy legal battle.

Commercial Loan Rules

The Illinois Credit Agreements Act states that a credit agreement or any revisions to an agreement is valid only if the agreement is in writing and signed by both parties. The law defines credit agreements as not including credit cards or loans for personal, household, or family purposes. The lender and the commercial debtor cannot create an agreement by:

• Discussing changes to an existing agreement;
• Reaching an oral agreement; or
• Sending a letter or email with the terms of the oral agreement.

Debtors try to use oral agreements to defend themselves against lenders who are attempting to collect on a loan or to file a claim against a lender that they accuse of violating their agreement. With credit agreements in Illinois, commercial debtors have no claim or defense based on oral agreements.

Personal Loans Becoming Commercial Loans

There are situations in which a personal loan becomes a commercial loan based on how the debtor is using the property connected to the loan. For instance, a debtor who received a mortgage for their home may become the landlord of that home. The debtor may have moved into a new home but decided to rent their old home instead of selling it. The home has become a commercial property for the debtor because they are receiving money from tenants. When you learn of the change in the property’s use, you should immediately inform the debtor that you need to change the mortgage from a consumer loan to a commercial loan. As previously explained, you will need a new written-and-signed agreement in order to enforce the commercial loan.

Contact a Chicago Creditor’s Rights Attorney

Illinois laws are designed to protect consumers in personal loans and creditors in commercial loans. You should understand your rights with both types of loans before you take legal action against a debtor. A Chicago creditor’s rights lawyer at Dimand Walinski Law Offices, P.C., can help you enforce your credit agreements. To schedule a consultation, call 312-704-0771.

Source:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2316&ChapterID=67