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Family member loan

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Mimi_Arc_en_ciel
Mimi_Arc_en_ciel Posts: 4,833 Forumite
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edited 13 April 2022 at 5:27PM in Loans
Hello! 

My dad has very kindly offered to lend a family member some money (less than £1,500)

Is there any paperwork he can give to be signed to say that the loan was given and the repayment terns? 

Would it be binding? (Ie, if they don't repay and dad goes through small claims would it be sufficient)

It's not a huge amount, it's more for a deterrent for my cousin to not refuse to pay it back. Everyone sees my dad as a bank unfortunately and he's a soft touch

TIA 

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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    He could type up a simple agreement.

    But it all depends on whether he's prepared to pursue the relative through the courts and whether the relative can pay. If not, there's not much point.
  • HobgoblinBT
    HobgoblinBT Posts: 235 Forumite
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    Sounds like a potential future case for Judge Rinder.   
     
    My advice in general is dont lend money to friends or family.  If it goes wrong you will loose the friend.   

    Judge Rinder’s main point about enforcing loan agreements between friends and family is to include a clause stating that the agreement should be enforceable under English law and that if defaulted it will be taken to the small claims court.  
  • diystarter7
    diystarter7 Posts: 5,202 Forumite
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    Simply put, only lend money you can afford to lose.
  • Brie
    Brie Posts: 10,862 Forumite
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    I agree with what others say.

    My mom has loaned myself and my siblings money from time to time.  She hand wrote a note with the date, amount and terms for repayment and little else.  The note was then saved with her will until such time as repaid.  If not repaid then it would be deducted from any inheritance.  Obviously this may not apply between your dad and the recipient.
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • sourcrates
    sourcrates Posts: 29,212 Ambassador
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    Lots of horror stories on this forum about loans made by family members which where then subsequently defaulted on.

    Honest answer is no agreement in the world will get him back his money should the relative not want to pay it back.

    Obtaining a judgement is just a basic first step, there are numerous levels of further enforcement to go through to actually recover the money, and it all depends on the debtors willingness or ability to pay in the end.

    If they are intent on lending the money anyway, only do so with the expectation of never seeing it again.
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  • Mimi_Arc_en_ciel
    Mimi_Arc_en_ciel Posts: 4,833 Forumite
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    Hi, 

    Thought I'd update you! Dad decided against lending the money 

    Thanks for the advice though! Much appreciated

    M x 
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