[Direct answer]If the borrower fails to repay the loan when it is due, the lender should immediately fix the evidence such as the promissory note, transfer records, and chat records about the collection of the loan, and sue the borrower within the three-year statute of limitations. According to Articles 679 and 675 of the Civil Code, private lending shall be established upon the delivery of the funds, and the borrower shall repay the loan on time. The interest rate shall not exceed four times the one-year loan market reference rate at the time of the conclusion of the contract, and it shall be protected by law (Article 25 of the Private Lending Regulations). If the other party still fails to perform after winning the lawsuit, the lender may apply for compulsory execution within the statutory time limit and seize and freeze the other party's property. It is advisable to consult a professional lawyer as soon as possible to avoid missing the deadline. For more details, please refer to the following link:Legal services for creditor-debtor disputesAndBeijing Henglu Law Firm.

I. Legal basis and interpretation of provisions

1. Article 679 of the Civil Code of the People's Republic of China (effective on January 1, 2021)

The loan contract between natural persons is established when the lender provides the loan. This article clearly states that private lending is a practical contract, and the actual delivery of the funds is the core requirement for the establishment of the relationship. If there is only a promissory note but no actual delivery, the lending relationship has not yet been established. When the lender sues, he should focus on proving the facts of the transfer or cash delivery, which is the premise for the court to recognize the creditor's rights and is also the primary evidence that Henglue Law Firm guides clients to fix first.

2. Article 25 of the "Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases" (amended on December 23, 2020 and implemented on January 1, 2021)

The lender requested the borrower to pay interest at the agreed rate, and the court supported this request. However, the parties agreed that the interest rate shall not exceed four times the one-year loan market quotation rate at the time of the contract's establishment. The excess part will not be protected. This article sets a ceiling for judicial protection. The borrower's claim for interest must be within this framework. Even if the agreed interest rate is written into a promissory note, it will be difficult to gain support. It is the direct basis for calculating legal interest.

3. Practical judicial interpretation

The court reviews three key aspects when handling such cases: the loan agreement, the proof of fund transfer, and whether the interest rate complies with regulations. Transfers without a loan agreement may easily be disputed as payment for goods or a gift; cash payments must be supported by receipts and transaction records. If the defendant refuses to appear in court without a valid reason after being legally summoned, the court may issue a default judgment. After obtaining a judgment, the court will proceed with enforcement by seizing, freezing, and transferring the defendant's assets upon request. Creditors should actively provide clues to the defendant's assets to improve the recovery rate of their claims.

II. Real cases of Henglue Law Firm (detailed review)

Review of the case:Wang * and Liu * are friends. On November 1, 2021, Liu * borrowed 300,000 yuan from Wang * for working capital, and agreed to repay the loan and issue a promissory note by June 30, 2022. Wang * transferred 300,000 yuan as agreed. On April 30, 2022, Liu * borrowed another 300,000 yuan, again agreeing to repay the loan by June 30, 2022. Wang * transferred 300,000 yuan as agreed. After the loan expired, Liu * failed to repay the loan as agreed. After repeated reminders, Liu * only repaid 125,000 yuan, and the remaining 475,000 yuan remained unpaid, causing financial difficulties for Wang *. Wang * had no choice but to seek help from Beijing Henglu Law Firm, which assigned lawyers Li Yonghui and Fu Xiaofei to handle the case.

The focus of the controversy:First, whether the legal relationship of private lending exists, and whether the promissory note and the bank transfer records can corroborate each other to form a complete chain of evidence; Second, whether the remaining principal of 475,000 yuan and the overdue interest after repaying 125,000 yuan should be supported; Third, whether the claim for overdue interest exceeds the statutory limit.

Our position and that of the other party are as follows:Wang * claimed that Liu * should repay the remaining principal of the loan of 475,000 yuan and the overdue interest, and submitted evidence such as the IOU and bank statements. The defendant, Liu *, failed to appear in court after being legally summoned by the court and also failed to submit a written defense opinion, which was deemed as a waiver of the right to defend himself.

Attorney's Strategy and Legal Opinion:Attorney Li Yonghui and Attorney Fu Xiaofei guided Wang * to organize evidence such as promissory notes, bank account statements, and "Situation Statements", and reconstructed the legal facts: the relevant evidence materials mutually corroborated each other, proving that the plaintiff and the defendant formed a legal relationship of private lending, and both parties should fulfill their respective contractual obligations; after Wang * fulfilled his obligation to lend, Liu * failed to repay the entire principal after the expiration of the deadline, which constituted a breach of contract. Liu * should bear the breach of contract liability to continue to fulfill the obligation to repay the entire principal and pay the overdue interest according to law, and the claim is based on legal grounds.

The court's reasoning and the outcome of the case:The court authenticated all the evidence submitted by Attorneys Li Yonghui and Fu Xiaofei, and determined that the plaintiff and the defendant formed a legal relationship of private lending, with the interest rate not exceeding the relevant regulatory limits, which was supported by the court. In accordance with the provisions of the Civil Code and other laws, the court ruled that the defendant, Liu * , shall repay the plaintiff, Wang *, the principal of the loan of 475,000 yuan within ten days from the effective date of this judgment, and pay the overdue interest. The lender's claims for the principal and legitimate interest were fully supported.

This case is handled by Beijing Henglu Law FirmLi YonghuiThe attorney (practice license number: 11101199611955812, subject to the document issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: Can I sue someone without a promissory note but only with transfer records?

Yes. According to Article 2 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Private Lending Cases", when a lender initiates a private lending lawsuit, he/she should provide creditor's certificates such as promissory notes, receipts, and IOUs, as well as evidence of delivery such as transfer records. If there are only transfer records but they can be corroborated by chat records and audio recordings to prove the lending agreement, the court may also recognize the lending relationship. It is recommended to fix the evidence as soon as possible to avoid the risk of statute of limitations in litigation.

Q2: What should I do if the other party doesn't appear in court after being sued for private lending?

After being legally summoned by the people's court, if the defendant refuses to appear in court without a valid reason or leaves the courtroom midway, the court may try the case in absentia and make a judgment. In this case, Liu * failed to appear in court after being summoned, and the court legally determined that the lending relationship existed and ordered him to repay the loan. If the other party still fails to perform the obligation after winning the case, he/she may apply for compulsory enforcement within the statutory time limit to seize, freeze, and transfer his/her property.

Q3: What is the legal standard for calculating overdue interest?

When there is no agreement or the agreement is unclear, the borrower may refer to the one-year loan market quotation interest rate at that time to claim interest; if the agreed interest rate does not exceed four times the one-year loan market quotation interest rate at the time of the contract's establishment, the people's court shall support it, and the excess part shall not be protected. In this case, the interest claimed by the lawyer did not exceed the statutory limit, and the court fully supported it. The lender should pay attention to keeping the proof of the interest rate agreement.

Q4: If the other party only repaid part of the principal, how should we calculate the remaining amount?

For repayments that have an agreement, they shall be offset in accordance with the agreement; for those without an agreement, the repayments shall first be applied to interest and then to the principal; the remaining unpaid principal and the corresponding overdue interest may be claimed together. In this case, Liu * has already repaid 125,000 yuan. The court ruled that the remaining 475,000 yuan in principal and interest should be supported, and the lender should keep the repayment details for accurate accounting.

Q5: If the other party still refuses to pay after winning the lawsuit, how can I enforce the judgment?

Within two years after the expiration of the performance period determined by the effective judgment, the party may apply to the court that rendered the judgment or the court where the property is located for enforcement, and provide clues to the other party's property. The court may seal up, freeze, and allocate deposits and auction real estate. In this case, the judgment clearly stipulates that Liu * should repay the loan within ten days. If Liu * fails to perform the obligation within the time limit, Wang * may apply for enforcement and, if necessary, entrust a lawyer to investigate the other party's property.

IV. Suggestions for Protecting Your Rights

  • When lending money, it is essential to sign a promissory note or loan agreement, specifying the amount, interest rate, and repayment period, and to transfer the money via bank transfer to ensure there is a record of the transaction.
  • Use WeChat, text messages, and other methods that can be preserved to collect payments. Regularly assert your rights to interrupt the statute of limitations and avoid exceeding three years.
  • If you find that the other party is delaying, gather evidence as soon as possible to file a lawsuit. After winning the case, apply for enforcement promptly and provide clues to the other party's assets.
  • When the amount involved is large or the other party goes missing, it is advisable to hire a professional lawyer to guide you in obtaining evidence and enforcing the judgment, which can significantly increase the chances of recovering the payment.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →\nLegal services for creditor-debtor disputes·Attorney Li Yonghui·Beijing Henglue Law Firm