Debt between family member

traceyjf

In 2005 My husbands sister gave him £13k to help pay of his ex wife. He couldnt get the money together himself.

At first he didnt want to borrow the money off his sister but she insisted. She told him he could pay her back whenever he could get the money together.

Because she remortgaged to lend him the money he agreed that he would give her money monthly to cover the extra cost on her monthly mortgage payments.

No paper work was ever signed between them both and nothing was said verbally between them to say exactly when she would get the money back in full.

Yesterday my husband got home to a letter from her solicitor saying that unless he paid her the full amount that she paid him in 2005 by the 30th April she would be taking him to court.

She is asking for the 13k back dispite the fact he has paid £3500 over 5 years already. The reason she is saying he still owes her 13k is because she is on an interest only mortgage!

My husband was never aware of the interest only mortgage when she gave him to money and if he was he would never have taken it in the first place.

Can she take him to court without there being a signed agreement/contract stating when she would get the money back?

AND is he only paying the interest OR is the money he has been paying her for 5 years to come off the 13k?

I would appreciate any advice

immoral_angeluk

Wow, what a nice sister. Have they fallen out recently or something or has this come totally out of the blue? Is she in financial difficulty herself?

redpete

traceyjf wrote: »

AND is he only paying the interest OR is the money he has been paying her for 5 years to come off the 13k?

What the money he has been paying her each month goes towards is defined by the agreement between them. As there is no written agreement nor a verbal agreement that they agree on it's impossible to say.

On the assumption that he has been paying the same amount as the increase in her mortgage then I would suggest that he would still owe her the full £13k. That's the extra amount that she still owes on her mortgage so why should she subsidise his loan? £3500 over 5 years is equivalent to annual interest of between 5% and 5.5% so doesn't seem unreasonable.

However, suddenly asking for £13k with less than 2 weeks notice seems quite unreasonable to me.

traceyjf

She has been making his life hell for the past year. She asked for it back in 2009 and there was no way of him getting it. He continuted to pay her the monthly amount then last night this letter.

He is worried sick and she has got the whole family involved which has made things so difficult for him.

I dont know where he stands to be honest. I cant see it going to court with out there being a signed agreement/contract.

traceyjf

Just off the phone to debt helpline and he has no ties to her mortgage at all.

She lent him the money and they said how she went about getting the money to give him is her responsibility. So if she is on an interest only mortgage then he isnt liable.

He only needs to pay her what she gave him.

The only agreement (only agreement!) between them was that he would pay her back 13k...it only came to light a year ago that she was interest only and that isnt his fault.

Tixy

It could go to court, whilst without an agreement her case would not be very strong, she quite possibly does have a paper trail that helps support her argument,i.e the original transfer, did that go into husbands bank account? the fact he has making a regular payment to her each month since, which would all help her case.

He could really do with establishing whether the monthly amounts he has paid, did just cover the interest on the extra mortgage, ideally without writing to the solicitors to admit the debt. And also how much her interest rate has changed from 2005 to now. If it went down and she didn't reduce the payments from husband then that would help his case that he must have paid some of the capital, or that the 2 loans are not directly related (obviously they are not legally related).

Can he try to come to an agreement informally with her where he pays it back (capital & interest) over the next 3years or so.

woody01

immoral_angeluk wrote: »

Wow, what a nice sister. Have they fallen out recently or something or has this come totally out of the blue? Is she in financial difficulty herself?

Well the husband doesn't sound the best either tbh.
Only paying off £3.5K in 5 years.
That doesn't sound like he is making too much effort to clear it now does it?

Rafter

Why should his sister be £3,500 out of pocket at a result of paying interest on the second mortgage for the last 5 years.

I'm sorry - but your husband is naive to think that a loan of this size would somehow be interest free.

You really don't want this getting to court but somehow need to find a way of paying it back.

How much could you afford to pay each month? How much could you afford to borrow in your own name. If your husband really has no possible way of paying it back, he should never have paid the loan. Are there any elderly parents or does your husband own a property? In which case perhaps the sister would be happy to wait until an inheritance or until the house is sold?

R.

crispy_chris

Not talking specifics here by I have a hypothetical question for anyone who knows the answer.

I give my sister £4000, no repayment just because I love her.
3 years later I get into financial trouble and things have turned a bit sour between me and my sister.

Can I issue a court summons and demand this money back? There is a paper trail to show that I transferred the money to her but nothing to say why (as it genuinely was a gift).

I just wondered what would happen in terms of a court decision.

[edit: just to confirm that none of this is true!]

immoral_angeluk

woody01 wrote: »

Well the husband doesn't sound the best either tbh.
Only paying off £3.5K in 5 years.
That doesn't sound like he is making too much effort to clear it now does it?

True... but at just shy of £100 a month you don't know what his circumstances were and if he just simply couldn't afford anymore?

Don't get me wrong I don't agree with lending family or friends money at all, it's just asking for trouble IMHO.

immoral_angeluk

crispy_chris wrote: »

Not talking specifics here by I have a hypothetical question for anyone who knows the answer.

I give my sister £4000, no repayment just because I love her.
3 years later I get into financial trouble and things have turned a bit sour between me and my sister.

Can I issue a court summons and demand this money back? There is a paper trail to show that I transferred the money to her but nothing to say why (as it genuinely was a gift).

I just wondered what would happen in terms of a court decision.

[edit: just to confirm that none of this is true!]

No, because it's a gift. A gift is a gift in the eyes of the law and if you gave it to her on the premise that she didn't have to pay it back you wouldn't be able to get it back from her in the future just because of your own hardship.

The onus in any court case is to show there was an agreement to pay it back at some point, not just that the money was received.