The usual shape of the case
Most loan suits are brought by lenders to collect after a default, often against the borrower and any guarantors at the same time. In New York, a lender suing on a promissory note or an unconditional guaranty can often use an expedited procedure that asks for judgment on the papers at the very start of the case, which leaves less time to put real defenses forward. Loans secured by real estate can lead to a foreclosure case, which follows its own procedures. Borrowers sometimes bring claims of their own, for example over a broken commitment to lend or conduct beyond what the agreement allows, though courts generally enforce loan documents as written. Some merchant cash advance agreements are litigated over whether they are really loans, which affects whether usury rules apply.
Defenses that come up
Usury can be raised in New York, but whether it is available depends on the borrower and the loan, and corporations face limits on raising it. Guarantors often argue that the guaranty was modified, released, or did not cover the debt in question, though many guaranties waive those defenses in broad language. Disputes over how default interest, late fees, and prepayment charges were calculated are common. Documentation gaps, such as missing assignments after a loan was sold, can matter in some cases. Gather the loan agreement, notes, guaranties, security documents, payment history, and all correspondence about the default or any workout talks.
Choices before and after suit
Before a suit is filed, a forbearance or workout agreement may buy time, but these usually ask the borrower and guarantors to acknowledge the debt and waive defenses, so they deserve careful review. After suit, the response deadline is often short, especially under the expedited procedure, and missing it can lead to a default judgment. We review the loan documents and the lender's claims, look for defenses and counterclaims, and talk through whether negotiation, litigation, or bankruptcy planning fits. For lenders, we focus on documenting the default and choosing the most efficient enforcement route. Confessions of judgment in loan documents raise their own issues, including limits New York adopted on using them against borrowers outside the state.
