Kenneth Catanzarite (left) and Peter Kessler argued before the Texas Supreme Court on a usury law case sent from the U.S. Fifth Circuit.Texas Supreme Court Grapples Over Fifth Circuit Question on State Usury Law
The Texas Supreme Court must decide whether Texas law permits interest rates on the total principal amount for the life of the loan, regardless of a declining principle balance.
January 15, 2025 at 10:49 AM
5 minute read
What You Need to Know
- The Texas Supreme Court was asked by the U.S. Fifth Circuit to answer a question on the state's usury law.
- A credit card industry processor sued its lender claiming it should not have been charged interest on principle already paid.
- The court must decide what effect legislative amendments of the 1990s had in applying interest to a principle balance.
Texas Supreme Court justices appeared reluctant to allow a reading of Texas law that imposes an interest rate on the total principle balance over the life of the loan, regardless of a declining principle balance.
The case came before the court as a certified question from the U.S. Court of Appeals for the Fifth Circuit, where American Pearl Group LLC sued National Payment Systems LLC, alleging the latter violated Texas usury law.
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