legal question surrounding debt between friends

tommyboy26

a close family member has a problem. they borrowed money from a friend and are paying it back slowly(as its all they can afford) the friend wants it back quicker.

the friend is now claiming they have seen a solicitor and will be taking legal action to recover the debt.

The family member is quite worried about this as they have never been in any legal trouble.

I always though that this was not possible as it wasnt for a service or business (if you know what i mean).

My question is can you bring a friend to court over a debt between you?
neither side is denying the debt is owed but it would be great to know if this was really possible or a scare tactic.

PS. this is really about a family member and not one of those cases where it is really me :P

Addle

How was the debt created?
Was there paperwork?

GreeBo

If there is no paperwork stating repayment terms then I dont see how its enforceable?

You family member could just deny it was a loan and state that it was a gift. (not that they would, but in the absence of evidence to the contrary...)

Hotblack Desiato

Only an idiot would sue somebody who doesn't have any money. What do they expect a court to do - award them a pound of flesh?

tommyboy26

The debt was agreed by the 2 of them with a no rush to pay back type agreement. The person who loaned the money has text messages confirming the owing money

GreeBo

tommyboy26 wrote: »

The debt was agreed by the 2 of them with a no rush to pay back type agreement. The person who loaned the money has text messages confirming the owing money

but nothing confirming any repayment schedule?

NUTLEY BOY

Generally, you cannot seek to enforce a right that does not exist or that has not been created for a specific situation.

If the lender created no specific period for repayment they cannot create one on a unilateral basis to suit their own convenience.

The absence of paper work is not detrimental to many contractual situations but the text message may well take care of that.

tommyboy26

GreeBo wrote: »

but nothing confirming any repayment schedule?

no nothing like that

qwerty13

Are you sure that your family member is genuinely making a good effort to pay the money back? Is it possible that they’re making minimum effort, and that is what has caused a change of heart by the person who gave them the loan

tommyboy26

qwerty13 wrote: »

Are you sure that your family member is genuinely making a good effort to pay the money back? Is it possible that they’re making minimum effort, and that is what has caused a change of heart by the person who gave them the loan

no they are def making the best effort they can. they are actually going over their means to pay the person back

Marcusm

NUTLEY BOY wrote: »

Generally, you cannot seek to enforce a right that does not exist or that has not been created for a specific situation.

If the lender created no specific period for repayment they cannot create one on a unilateral basis to suit their own convenience.

The absence of paper work is not detrimental to many contractual situations but the text message may well take care of that.

I think the case law runs against your presumption; where there is no fixed repayment schedule, I believe that case law would imply a rebuttable presumption that it is repayable on demand. There is a detention if the creditor’s money’s and this can only subsist so long as the creditor accepts.

mdebets

Marcusm wrote: »

I think the case law runs against your presumption; where there is no fixed repayment schedule, I believe that case law would imply a rebuttable presumption that it is repayable on demand. There is a detention if the creditor’s money’s and this can only subsist so long as the creditor accepts.

But couldn't you argue, that if the OP's friend has been paying back the debt in an orderly and regular fashion, e.g. 20 Euros a month, over some time, his friend has accepted this as the repayment schedule if he hasn't complained earlier?

Marcusm

mdebets wrote: »

But couldn't you argue, that if the OP's friend has been paying back the debt in an orderly and regular fashion, e.g. 20 Euros a month, over some time, his friend has accepted this as the repayment schedule if he hasn't complained earlier?

I think the debtor would have to positively assert that the creditor has expressly agreed to a particular course of action; I doubt mere silent acquiescence would be sufficient.

Peregrinus

Marcusm wrote: »

I think the case law runs against your presumption; where there is no fixed repayment schedule, I believe that case law would imply a rebuttable presumption that it is repayable on demand. There is a detention if the creditor’s money’s and this can only subsist so long as the creditor accepts.

Much is going to depend on the circumstances and context. If the need for the loan arose because the borrower had an immediate financial obligation, and only a small income, then the loan was advanced with both parties knowing that he couldn't pay that sum on demand; that's the whole reason he needed the loan. In which case it's hard to impute a common intention to them that he would repay it on demand;more likely that he would repay it at a rate, and over a time, reflecting his level of income at the time the loan was advanced (or at a rate/time which the parties discussed at the time).

tommyboy26

thank you everyone for your response. Turns out the solicitor said they dont have a case so now the friend wants to try make an arrangement.

Donald Trump

Sorry to hijack the thread. But a somewhat similar situation.

How does it work if someone loaned another person a fairly substantial amount of money over time, not sure whether they would get it back, but loaned it with that knowledge. Then eventually, years later, the borrower comes into some money and wants to pay a fair chunk back together in a lump sum.

Are there tax implications? Could both potentially be liable for some kind of gift tax? Or would it be ok as long as there was evidence of transfers etc. Are there time limits?

I'm not talking about legal action. I mean just giving it back.

Peregrinus

As long as you can evidence the original advance, then you should have no difficulty getting the repayment regarded as a partial repayment of a loan, not as a gift. The fact that repayment was uncertain, and depended on the borrower's circumstances changing, wouldn't change the fact that thiw was always an advance made in the hope of repayment - a hope that, as events have shown, was not unjustified or unreasonable.

There are no time limits.

Donald Trump

Peregrinus wrote: »

As long as you can evidence the original advance, then you should have no difficulty getting the repayment regarded as a partial repayment of a loan, not as a gift. The fact that repayment was uncertain, and depended on the borrower's circumstances changing, wouldn't change the fact that thiw was always an advance made in the hope of repayment - a hope that, as events have shown, was not unjustified or unreasonable.

There are no time limits.

Could the "borrower" be stung for gift tax if there is a portion they can't repay?

Peregrinus

1. We'd need to be talking about fairly large sums here, given the annual small gift exemption of 3k, plus the lifetime allowance of 16,250 for gifts from people not related to you. (More, if the loan is from a family member.)

2. But, yeah, if the amount is large enough, there is a potential problem. The forgiveness of a debt is a gift for CAT purposes.

3. But the gift isn't made until the debt is actually forgiven. The CAT Act talks about "the release, forfeiture, surrender or abandonment of any debt or benefit". The fact that part of the debt remains outstanding, and that the lender isn't currently pressing for repayment, doesn't mean the debt is forgiven. There'd have to be a release of the obligation by the lender.