Unexpected cash gift

exponential

Hi guys.

I have a question which I'm hoping somebody on here can answer.....

I was at a close family friends house today and the discussion turned to debt and the burden of it all.
I was asked how much debt I was in and I answered.
The response was a shock to me to say the least!
Our friend offered to pay our debt in full in return for an affordable monthly payment.
I was absolutely floored by this reply and wasn't expecting it at all.
I am in debt to the tune of 50k. I earn 50k a year so, without the debt, would have a generous amount of disposal income.
The debt came about because my wife had to give up work two years ago to look after her terminally ill mum so, with her not having an income, I decided I would take on all her debt to ease any burden on her..... Anyway..... My question is this.

Can our friend just simply transfer the 50k to my bank account in order for me to clear the debts or is there any issues I should be aware of?
I realise this is a silly amount of money which is why I'm asking.

I will be paying it back at £800 a month (which is significantly less than my debt payment at present) which will take me around 6 years.

I hope someone can assist me and, if I have posted in the wrong section, please let me know.

Cheers guys.

Neil_Jones

It can be just as as simple as that - somebody gives you money and you do what you need.

However what I would say is the likes of Judge Judy and Judge Rinder are full of people who've loaned money to each other like this, got nothing back, more debts have accrued and they've fallen out major big time. Nothing like airing dirty laundry in public on national TV.

That being said, get everything and then some more in writing, so at least then if you have a disagreement you can refer to it.

eskbanker

exponential wrote: »

Unexpected cash gift

Best not to perceive it as a gift - it's a loan that needs to be repaid, and the agreement you both sign up to needs to reflect that, as well as specifying (for example) what would happen in the event of your death prior to full repayment....

xylophone

If your friend has the spare capital and wishes to enter into a loan agreement with you, then in principle there is no reason why he should not do so - perhaps it suits him in so far as interest rates offered by banks and building societies are lower than you are prepared to offer?

It would be as well for a formal loan agreement to be drawn up by a solicitor which would be signed and witnessed in his presence.

I wonder would the solicitor be prepared to accept the money into his client account and make the transfer on your friend's behalf?

This could prevent money laundering kerfuffle arising with your bank?

exponential

Hi.

Thank you both for your quick responses!

I fully intend to have everything in writing so she has that protection and satisfaction of it all being in black and white.
It will state the loan amount, monthly payment amount, frequency of payments and expected end date.
I will also add a section on if I miss a payment and, as suggested, in the event of death. (god forbid).

She is concerned about any questions the bank will ask when she is doing the transfer.
She said she will say its to help us with a deposit for a house which, of course, is a lie.
I don't want her to lie about anything so can she literally just say she is gifting the money to us?

I personally don't see it as a gift by any means as, I am paying it back but I'm not sure how banks work with these kind of amounts of money...

AnotherJoe

What have you and your wife done to stop those debts rising ..... seems as if she already had some significant debt to start with, and you I presume also ? Were you both overspending or was it some extreme events?
I suggest you document this loan, get it signed and witnessed. Also try and pay it back quicker. If £800 is significantly less than now could you overpay by say £100-£200?

P.s. why does your friend need to worry about money laundering and transferring the money to your account .? you can get settlement figures for the loans and she can pay the debts off directly without passing through your accounts.

exponential

xylophone wrote: »

If your friend has the spare capital and wishes to enter into a loan agreement with you, then in principle there is no reason why he should not do so - perhaps it suits him in so far as interest rates offered by banks and building societies are lower than you are prepared to offer?

It would be as well for a formal loan agreement to be drawn up by a solicitor which would be signed and witnessed in his presence.

I wonder would the solicitor be prepared to accept the money into his client account and make the transfer on your friend's behalf?

This could prevent money laundering kerfuffle arising with your bank?

Hi.

We discussed this very thing and I agree that it is the sensible thing to do.

I intend to overpay at the end by 4 months so she will receive 3200 as thank you from me.
She was overjoyed by this as it's a better return than any bank could ever give!
It would be a pleasure for me to overpay as what she is doing for us is literally life changing in our case.

I was concerned about the money laundering thing as I didn't know how her bank would respond to her just transferring such a significant amount of money...

xylophone

what would happen in the event of your death prior to full repayment....

I wonder would decreasing term assurance be an option?

System

As said, get something in writing. It doesn't need to be official (ie a solicitor or similar). Just ensure that everything is in writing, including the payment terms, and that all signatures are witnessed, ideally by an independent witness so that there are no arguments.

I lent my oldest and best friend £20,000 nearly 20 years ago as health issues precluded her from getting a decent mortgage offer. Even though we have been friends all our lives, and trust each other implicitly we both wanted everything is in writing. We both altered our Wills to take account of what would happen if one of us died. She kept to the payment plan and yes, we're still best buddies and she still lives in that house. We have changed our wills back now too.

I don't know how much of an issue money laundering would be. If your friend is a long term customer of the bank, I am sure nothing would flag up. Best not to lie about what the money is for. I am sure an explanation from your friend to the bank clerk would be satisfactory. Or he/she could write a cheque.

Good luck

exponential

AnotherJoe wrote: »

What have you and your wife done to stop those debts rising ..... seems as if she already had some significant debt to start with, and you I presume also ? Were you both overspending or was it some extreme events?
I suggest you document this loan, get it signed and witnessed. Also try and pay it back quicker. If £800 is significantly less than now could you overpay by say £100-£200?

P.s. why does your friend need to worry about money laundering and transferring the money to your account .? you can get settlement figures for the loans and she can pay the debts off directly without passing through your accounts.

Hi.

We both were silly a good few years ago and we overspent and it got a bit out of hand.
At the time, the debt didn't matter because our combined earnings were way above and beyond the debt.
We were comfortably paying the debts whilst having excess cash at the end of the month which I was using to overpay on the highest interest account first.
All was going great and I knew, at the rate we were paying it off, we would be debt free within 3 years.
Then the cancer diagnosis came 2 years ago for my wife's mum. That changed everything.
It completely turned our lives upside-down.
My wife's mum looked after our 2 children so we could both go to work but she got sick very quickly (especially with the chemo) so she was unable to look after our kids.
My wife had to give up work which had a significant impact on us financially and I had to start working away from home to earn more to pay the bills.

She's beaten their 18 month diagnosis but she's terminal nonetheless.

Anyway..... The result is I earn exactly the same as what we owe and the pressure on me is intense to say the least.

Until today that is......

exponential

xylophone wrote: »

I wonder would decreasing term assurance be an option?

Can you elaborate on this? I'm not familiar with this....