Can a Jew pay interest to another Jew when ordered by a court of law?
What happens if somebody buys your (a Jew’s) bank note that you owe the bank and that person is a Jew himself (an attorney collection firm). Now he is suing you and is demanding back and future interest on the note that he purchased. He’s obviously doing this in secular court. What happens if the court orders you to pay him? You are a Jew paying interest to another Jew and you are ordered by the court of law. Would Dina D’malchusah Dina not apply in this case since there is an Issur of the Torah? Would bankruptcy be a way out?
You would be allowed to pay the interest (declaring bankruptcy is not necessary but is allowed if you want to take that route), however, it is preferable to first approach a Beis Din to summon the attorney to a Din Torah before taking any of the above routes.
Ribis- It would not be considered Ribis in this situation since you are being coerced to do so (additionally, since the interest wasn’t specified at the time of the loan it is at most Rabbinical which gives more room for leniency).
Bankruptcy- In general it would be prohibited to claim bankruptcy to avoid paying debt. However, in this situation where the other is demanding against Halacha, you have the right to use such an option.