Do i need a legal document?

amy.ackles

Hi

Just need some advice. I have lent my sister £31,000 over the last 10 years for her student debt and mortgage payments. However our relationship has always been rocky and she will not be able to pay me back for a while.

Is there a legal document that i could get her to sign, where she acknowledges that she owes me the money?

This has been playing on my mind for quite a while and may cause problems, but i would rather be safe than sorry.

Amy

bcl999

You may get a perfectly accurate answer to your question here but it's a lot of money involved. I would ask a solicitor - most of them do an initial consultation either free or for a fixed sum. Local libraries used to keep a list of the solicitors in the area who offered the service or try at Citizen's Advice. Do you think she will agree to sign anything now, though?

amy.ackles

I am not sure, which is why i want to know if there is a legal document or way of her acknowledges the loans before i bring it up with her. There have been problems in my family before where money has been lent and then not given back.

Not good, so want to make sure i get my money back.

zzzLazyDaisy

You don't need any fancy legal document, all you need is a written agreement acknowledging the debt. In its most basic form this could just be a letter from her to you, confirming she owes you the money and signed by her.

Ideally the document should also make provision for repayment - otherwise although you can prove she has borrowed the money, you can't prove that she owes you it back.

A simple agreement might be something like

I [name] of [Address]

Agree that [name] has loaned to me the following sums:

[Insert here a list of the amounts and the dates]

I agree that I will repay this money in monthly instalments of [insert figure].

Further I accept and agree that, upon receipt of a written request by [name] for full repayment of the loan, the full amount shall immediately become due and payable.

Signed..... Print Name..... Date.......

Witnessed by:

Signature....
Print Name....
Address........

If you have the agreement witnessed, that person should be present and witness her actually signing the document.

You may think this is a step too formal, in which case, leave the witness bit out, but if you believe there is any risk she she might say she doesn't really owe you the money, and she only signed it because you were threatening her (ie signing under duress) then having the document witnessed provides an extra layer of evidence - that assumes the witness would be willing to go to court and give evidence for you, so choose your witness wisely.

Which brings me to another very important point - what will you do with the Agreement? If she refuses to repay the money and you wish to take legal steps to enforce the agreement, you will have to go to court. The amount owed is outside the ambit of the small claims court so you will be faced with court fees, which would be added to the debt assuming you win - but that doesn't help you if she is unable and/or unwilling to pay.

In the meantime, the family the court action has probably driven a wedge through the family which may be difficult to repair.

Having said all that - I have regularly lent my cousin varying amounts over the years, usually by putting something on a zero percent credit card in my name on the understanding that he will pay me back before the term expires. We have always drawn up an agreement (I'm a lawyer after all), and he has always been happy to sign it, he has also never failed to repay me. BUT I have always lent the money on the basis that from the moment it was given, it became MY debt, and in my mind, I write it off. If he repays it, then that's a bonus. If he doesn't, I won't lend to him again, but it won't affect our relationship apart from that.

It sounds like you and your sister have gone past that point?

hth

Daisy

Please note: the above comments are not intended to be legal advice. They are only my personal views and if you have any doubts or concerns you should seek independent advice from a solicitor or the CAB

amy.ackles

Thank you Daisy for your post, very helpful. I think i could get her to sign the written agreement, however i don't think she will be able to pay me back for a long time (10 years maybe) as she has a mortgage and just had a baby a few weeks ago.

What could i do about this?

zzzLazyDaisy

amy.ackles wrote: »

What could i do about this?

You could:

1 get her to agree a really small monthly repayment - say £5 a month, or even £1 a month. This would have the benefit of keeping the debt 'live' (bearing in mind that if a debt is more than 6 years old and hasn't been acknowledged in that time, the debt becomes statute barred and cannot be pursued through the courts). Get her to pay it by standing order, so hopefully she won't default.

2 take out the clause about payment by installments, and insert a clause saying something like 'I understand that I will not be required to make any repayment on this loan during the initial 12 months following the date of this agreement, after which time the issue of repayment will be reviewed annually, and revised to include monthly repayments should [insert your name here] request this.

Then make sure you do in fact review this arrangement annually - if she is paying anything, even £1 a month, you should confirm the repayments and the amount of the reduced debt. If not you just need to review and confirm the situation for another year. Either way get her to sign it.

Whatever, make sure the agreement doesn't just go in a drawer with no repayments and no further acknowledgement as you could hit trouble after 6 years.

On that point - when was the first loan made? The longer ago this was, the more important it is that you do get something down in writing without delay.

Daisy

(sorry to be a pain - just to confirm - this isn't legal advice.... )

paddyrg

Get regular if small payments, and work out the trigger condition for those small payments to increase (eg you will take 10% of any salary over £15k/year, or whatever). Make sure you give receipts for all those payments to act as a reminder/incentive that this is a real debt.

In all honesty, £31k is a huge sum. As a family member, remember you may find yourself prioritised lower than other creditors, so it may be worth coming to terms with the idea of never seeing it all come back in.

zzzLazyDaisy

paddyrg wrote: »

In all honesty, £31k is a huge sum. As a family member, remember you may find yourself prioritised lower than other creditors, so it may be worth coming to terms with the idea of never seeing it all come back in.

Sorry to say this, OP, but that is the best bit of advice you are likely to get.

Farway

paddyrg wrote: »

In all honesty, £31k is a huge sum. As a family member, remember you may find yourself prioritised lower than other creditors, so it may be worth coming to terms with the idea of never seeing it all come back in.

Have to agree, with family any money should be regarded as a gift, and if you get repaid that is a bonus

macman

On what basis did you agree to lend her this sum then?
Pay back in 10 years?
Pay back 'when she can'?
What arrangement for stage payments/interest?
It's rather too late now to be considering how she might pay you back, she may consider it a gift.

amy.ackles

Hi

I asked my sister for the money, as i want to buy a house and she said that she had £20k and that she would transfer the money to me the following week.

However after three day (after speaking to her husband), she told me that the money was no longer available as she had put it into her mortgage.

She said that she could get it out of her mortgage, but she would get a fine. I told her i needed it, so she would have to do that.

She has just phoned and said that the bank wont allow her to take it out of her mortgage and that she will get a job next year, as she has just had a baby and start to pay me back then.

This has really upset me. What should i do?
Really angry and disappointed.