What are the risks of private lending?

Due to the lack of standardized control, the effectiveness of private lending contracts is often affected by fraud, coercion, taking advantage of others' danger, malicious collusion between borrowers and lenders, harming the interests of guarantors, lenders knowing that borrowers borrow money for illegal activities, or the effectiveness is to be determined. Therefore, the disputes caused by the validity of the contract are also one of the main reasons for the frequent disputes of private lending.

Article 535 of the General Principles of Civil Law of People's Republic of China (PRC): If the debtor is slow to exercise his creditor's rights or subordinate rights related to the creditor's rights, which affects the realization of the creditor's due creditor's rights, the creditor may request the people's court to subrogate the debtor's rights to the counterpart in his own name, except that the rights belong exclusively to the debtor.

The scope of subrogation is limited to the creditor's due creditor's rights. The necessary expenses for the creditor to exercise subrogation shall be borne by the debtor.

The counterpart may claim the debtor's defense from the creditor.