Do statute barred rules apply to 'private/friends' loans

thetimes

Hi,

As title.

Do the rules of statute barred apply to a loan made to a friend, or does it have to be from a 'formal' loan source, eg banks etc.

The loan is about 17 yrs old with no payments made apart from 1 random repayment in 2003.

Thanks

HappyMJ

Yes they can't be enforced...you have a moral duty to repay them but no legal duty.

thetimes

HappyMJ wrote: »

Yes they can't be enforced...you have a moral duty to repay them but no legal duty.

Thanks for your quick reply.

The loan was approx £6K in 1995 for a small business start up that failed.

After 2003 and a one off repayment of £500, we lost contact and were unable to locate the lender and understood he had retired abroad.

We have now received a letter from a credit collection company threatening legal action through the courts on his behalf. As per my original post, i understood the debt would now be classed as Statute Barred and no longer legally enforceable?

I am considering making contact directly with him and offering a token payment which is all i can afford, but wanted to be sure where i stood in law before approaching him.

thetimes

thetimes wrote: »

Thanks for your quick reply.

The loan was approx £6K in 1995 for a small business start up that failed.

After 2003 and a one off repayment of £500, we lost contact and were unable to locate the lender and understood he had retired abroad.

We have now received a letter from a credit collection company threatening legal action through the courts on his behalf. As per my original post, i understood the debt would now be classed as Statute Barred and no longer legally enforceable?

I am considering making contact directly with him and offering a token payment which is all i can afford, but wanted to be sure where i stood in law before approaching him.

Am i definitely correct in my assumptions??

FireWyrm

He's sabre rattling. However, as someone who's been on the other end of a delinquent friend who promised faithfully she would pay me back, I can see his point.

Legally, there's little to nothing he can do about it. Morally speaking, you owe the guy. Perhaps even more so than a normal lender since he gave you money out of friendship and faith, which you didnt honor for whatever reason.

skintandscared_2

What paperwork was drawn up and signed for the initial loan?

Would you really use legalities to get out of repaying a friend?

fermi

Section 5 of the Limitation Act 1980 applies to a "simple contract", which if I remember correctly covers written and unwritten agreements. As long as both parties intended to enter into agreement.

So definitely applies here I would say.

If you want a bit more reassurance, give NDL a call:

--> http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=25_liability_for_debts_and_the_limitation_act

fermi

skintandscared wrote: »

What paperwork was drawn up and signed for the initial loan?

Would you really use legalities to get out of repaying a friend?

Not sure they said they were going to do that?

Was more a query on the legal enforceability through the courts I thought?

You can understand that with a debt collector threatening court action, thetimes would be understandably wanting to prevent any CCJ being applied for and granted.

But preventing a CCJ doesn't mean you can't choose to pay back if you want to. It just means you can do so without legal threats hanging over your head.

thetimes

skintandscared wrote: »

What paperwork was drawn up and signed for the initial loan?

Would you really use legalities to get out of repaying a friend?

Seriously cannot remember what paperwork if any was used/signed.

My last paragraph explains my position, that i was trying to approach him directly to offer some payment but i want to know my exact legal position before doing so, especially with having received legal threats.

RAS

You have made sure that he does not have a CCJ against you already?

Remember that

1. Once a debt is statute barred, then even if you start paying it remains statute barred.

2. That if he starts court action, you have to defend the case. The only defence that you need it that the debt is SB but you have to make your case.

thetimes

fermi wrote: »

Not sure they said they were going to do that?

Was more a query on the legal enforceability through the courts I thought?

You can understand that with a debt collector threatening court action, thetimes would be understandably wanting to prevent any CCJ being applied for and granted.

But preventing a CCJ doesn't mean you can't choose to pay back if you want to. It just means you can do so without legal threats hanging over your head.

Thanks Fermi,

It seems you have grasped my position exactly.

If however we do make contact with him, and offer some kind of repayment (either 1 off token payment or payment plan), would this resurrect the debt (in legal terms) if it had already become SBd?

This is my predicament. I want to try and play fair, but don't want to hang myself in the process.