Lent money to Brother-in-Law

capehorn

Two questions:

My sister had been happily married for 3 years, but financially they were having problems. After her husband's car broke down they needed to get a new one to travel to work but they didn't have the money and couldn't get a loan. She asked me if I would lend them £1,500, on the condition that they repaid £30 a week for a year. I agreed.

Low and behold, two weeks after buying the car, he left her. They had a big argument and the relationship is definitely over. He refuses to speak to her or us and doesn't even answer our emails. There was no paperwork involved, I simply transferred the money to their joint account. Do I have any rights here whatsoever? As the car was bought with my money, is there any way I could legally claim it as my property?

Before he started refusing to speak to her or us, he told her that he planned to deliberately run up debts and go bankrupt. He has now taken out all of the money out of their joint account and gone far beyond their overdraft limit and they are now accumulating large overdraft fees daily. My sister has been to the bank to explain the situation and before he went over their limit asked to have her name taken off the account. They refused, saying they needed permission of both account holders. She is now planning to go back at the weekend to try again. Is there anything that she can do to stop her from being jointly liable for these debts as they clearly were not her fault?

In the four years that we knew him none of us ever saw this side of him and we are all pretty shocked. Any advice would be greatly appreciated.

Thanks a lot

xmaslolly76

Hi Capehorn

Sorry to hear about the problems you and your sister are having. i dont know where you stand legally with the car but as far as the bank account goes she needs to go to the bank and ask them to freeze the account explaining what has happend so he cant make any further transactions without both of their signatures, unfortunately they will not remove her name without the Ex's signature which from what you have said is unlikely to happen but she can minimise any further damage by doing this so he cant run the account up any more.

If i was her as well i would go and get myself a basic bank account elsewhere and get any benefits/wages paid into there so he cant get his hands on them.

shaven-monkey

The car loan is probably a no hoper, sorry. The car will be in his name and the payment was made by him.

Ask the bank to freeze the account as she believes there have been fraudulent transactions on the husband's card. Assuming he is registered at her address, the replacement will come to her. This may not be strictly legal... But it will prevent him from increasing the debt.
The debt is "jointly and severally" meaning they're both liable for paying the debt off.
Make absolutely sure there are no other contracts signed by both parties for loans, leases, HP or whatever.
Consult a solicitor and Divorce him ASAP.
The bank would be able to tell which card was used to overdraw the account. The bank statements may well have that info which can be used during the divorce proceedings on top of the abandonment issue to claw back the money.
The bank may or may not have a record of her request that she be removed from liability for the account.
In theory. With a bit of luck she may even get the car.

foxwales

Unless you are the registered keeper of the car then you have no legal entitlement to this vehicle; however, as you have transferred this money to them, you should have a money trail from your bank showing this transfer which can be used as evidence. If your sister will also state the terms of the loan that they both agreed to jointly then this provides liability.

Should you wish to pursue the matter of the loan, then you can do so through a civil court by lodging a claim, however this could potentially get messy as if it was both your sister and her partner who agreed to the borrowing jointly, then they are potentially both jointly liable to repay the amount, however it could be argued in court that as he has full use and ownership of the car, that the onus of repayment should be on him, but like I said you would need to lodge a claim with your local County Court to pursue this matter legally from here on in.

With regards to the joint bank account, both parties MUST provide permission for the account to be closed, it can also be difficult to have the account frozen unless your sister informs the bank that her cards have been lost, which they are obliged to automatically freeze all transactions.

A letter should be written to the bank asking for a disassociation of your sister from the joint account on the basis that the partner is no longer contactable but is knowingly placing the account into arrears, if the bank are not prepared to lock the account, then she we will need to lodge a complaint with the bank and follow their complaints procedure and if that doesn't work, to then raise her complaint with the Financial Ombudsman for resolution.

Your sister should take comfort in that her partner will not be able to become insolvent if he is recklessley running up debts with no means to repay, the insolvency service will likely invesitgate this and will either place long term restrictions on his bankruptcy order if granted, or refuse him one all together, so he is a bit stupid thinking he can do this.

Hope this helps and hope she manages to sort this messy situation.

Good luck

peachyprice

foxwales wrote: »

Your sister should take comfort in that her partner will not be able to become insolvent if he is recklessley running up debts with no means to repay, the insolvency service will likely invesitgate this and will either place long term restrictions on his bankruptcy order if granted, or refuse him one all together, so he is a bit stupid thinking he can do this.

Sorry to say, but this is completely untrue, if he has debts he cannot pay he will be granted bankruptcy by the court, the investigation with the OR as to how he go to where his is happens AFTER the court has granted bankruptcy, all that may happen is that he will have the restrictions of his bankruptcy extended.

Unfortunatley he can easily become bankrupt and leave your sister liable for 100% of all joint debts, not just her half.

grey_lady

Is it worth visiting him - just turn up and ask him to either give you the car or carry on with the payments? It's easy to ignore phone calls but if your there in person it might be different.

foxwales

peachyprice wrote: »

Sorry to say, but this is completely untrue, if he has debts he cannot pay he will be granted bankruptcy by the court, the investigation with the OR as to how he go to where his is happens AFTER the court has granted bankruptcy, all that may happen is that he will have the restrictions of his bankruptcy extended.

Unfortunatley he can easily become bankrupt and leave your sister liable for 100% of all joint debts, not just her half.

I'm sorry but I disagree with you completely, a bankruptcy application has to be fully completed and lodged before a court, this includes details of all creditors and how the debt was appropriated by the applicant. Should the court deem the spending of the applicant to be reckless with the intent to borrow as much as possible with no means or intention to repay the debt, then the court has every power to reject the application for bankruptcy.

IF and IF the court grants the bankruptcy, then the Official Receiver who is appointed will investigate potential assets and spending habits. Reckless borrowing can lead to a much longer term of bankruptcy, however it is at the courts discretion to investigate and reject bankruptcy applications.

Just because you submit a bankruptcy application, is no guarantee that your application will be approved, the same applies for the Debt Relief Order.

Rockporkchop

I don't know about the bank account problem but as far as the car loan is concerned, your sister asked you to lend her the money to buy the car so she should continue to pay you the £30 per week until the loan is paid off. Yes I know it is an unfortunate situation for your sister but why should that become your problem and leave you out of pocket? She should feel obliged to pay you back the money.

Whose name is on the car log book anyway? If it is your sister then maybe she can report the car as stolen and get it back that way.

*Louise*

Gosh what a horrible situation, do they have any children involved in this?(I am assuming not atm)

Are you desperate to get your money back as soon as possible? Could you not suggest that your sister pays back a smaller amount each month (eg £50 or so) my first instinct would be to pursue the BIL through the courts though for either the money or at least the return of the car.

peachyprice

foxwales wrote: »

I'm sorry but I disagree with you completely, a bankruptcy application has to be fully completed and lodged before a court, this includes details of all creditors and how the debt was appropriated by the applicant. Should the court deem the spending of the applicant to be reckless with the intent to borrow as much as possible with no means or intention to repay the debt, then the court has every power to reject the application for bankruptcy.

IF and IF the court grants the bankruptcy, then the Official Receiver who is appointed will investigate potential assets and spending habits. Reckless borrowing can lead to a much longer term of bankruptcy, however it is at the courts discretion to investigate and reject bankruptcy applications.

Just because you submit a bankruptcy application, is no guarantee that your application will be approved, the same applies for the Debt Relief Order.

I can assure you you are wrong. You do not give in depth details of how the debt was incurred and what the money was spent on on the forms you fill in for the court, the forms are really very basic, the OR goes into those details after your bankruptcy has been granted. You migth find this interesting http://www.ned-cab.org.uk/debtselfhelp/bankruptcy_628_15.shtml


It is very very rare for bankruptcy to be refused, usually only because a) the applicant hasn't sought appropriate advice, b) the applicant hasn't got a certificate of failure for an IVA c) the applicant isn't insolvent. Reckless spending is NOT a reason for bankruptcy to be refused.

Also, a bankruptcy will not be extended due to reckless spending. A bankruptcy restriction undertaking/order might be applied, but the person would still be discharged after 12 months. The only reason a bankrupt would not be discharged after 12 months is due to not co-operating with the OR, not because of reckless spending.

Applying for a debt relief order is a completley different process which does involve investigation before one is granted due to the restrictive nature of a DRO.

capehorn

Thank you for all the replies

grey_lady wrote: »

Is it worth visiting him - just turn up and ask him to either give you the car or carry on with the payments? It's easy to ignore phone calls but if your there in person it might be different.

I have been thinking of doing this, but we don't know where he is living now. My sister understandable no longer wants to have any contact with him and even his mother who is sympathetic to us isn't sure where he is at the moment.

Rockporkchop wrote: »

I don't know about the bank account problem but as far as the car loan is concerned, your sister asked you to lend her the money to buy the car so she should continue to pay you the £30 per week until the loan is paid off. Yes I know it is an unfortunate situation for your sister but why should that become your problem and leave you out of pocket? She should feel obliged to pay you back the money.

Whose name is on the car log book anyway? If it is your sister then maybe she can report the car as stolen and get it back that way.

I know legally the debt is jointly my sister's but having seen what has happened to her there is absolutely no way I will make her pay it. The car will be exclusively in his name.

Is it possible to pursue this through the courts if we don't even have an address for him? I take it even if we do go down that route, if he get a bankruptcy order fast enough then the money is lost to me anyway. If he does go bankrupt, what would happen to the car? Surely he wouldn't be allowed to keep it. Could I challenge the bankruptcy (or at least make it difficult for him) considering what he has done?

Thanks a lot