Family loan gone wrong

Trooper21

My parents helped out my cousin, and they have now defaulted on any type of repayment plan.

Around 12k, we have proof of repayment (sporadic)

Option one: Forget about it...don't get the money back, irrepreble damage done

Option two: Court, get the money back (hopefully) but irreprable damage done

My question is (before I go to a solicitor) is, has anyone been through similar?

[Deleted User]

It doesn't matter what others have done.

Your parents need to decide if they are prepared to take legal action and, if they do, if there any realistic chance of them getting their money back. A court ruling is of no benefit if they have no money.

The_Fat_Controller

Was anything formally agreed and put in writing ?

Ebe_Scrooge

Sadly, this is exactly the reason why people will always advise against lending money to friends & family.

Trooper21 said:

we have proof of repayment

This in itself is of little value.  You really need to have some sort of signed agreement that states the amount of the loan and the repayment agreement.

If you do have evidence of the loan and the agreed repayment plan, you could go to court.  If the court finds in your parents' favour, that's great ... except, as ZX81 says, if your cousin doesn't have the money available to repay, then there's not a great deal you can do about it.

I assume your parents have already tried talking to your cousin about this?  Difficult though the conversation would undoubtedly be, you'd have a far better chance of a favourable outcome - even if you came to some sort of compromise (pay back 50% of the debt or whatever it may be).

elsien

Small claims court is only up to 10K so that route is out. Aside from the family repercussions, chasing the money will be more expensive. Have they got enough assets to make that worthwhile? 

Albermarle

Not an expert but from experience of a friend, if there is a written agreement, I think you can employ debt collectors directly without going to court. 
I think legally they can not enforce anything, but they can put pressure on people to pay up. However of course they don't come cheap and for £12K the cost maybe too much.

MEM62

Trooper21 said:

My parents helped out my cousin, and they have now defaulted on any type of repayment plan.
Predictable.  Money and friends / family do not mix well.  

Around 12k, we have proof of repayment (sporadic)
But do you have proof that it was a loan and on what terms repayment was expected?  

Option one: Forget about it...don't get the money back, irrepreble damage done
Chances are the money is gone anyway.  

Option two: Court, get the money back (hopefully) but irreprable damage done
Possibly throwing good money after bad?  You cousin cannot repay it if they have no assets and no court is going to force them to pay what they cannot afford.  

My question is (before I go to a solicitor) is, has anyone been through similar?
Many people, as you will discover reading posts on this forum.  In most cases the outcome for the lender is not good.   

Whichever way your parents go the family relationship is compromised.  Up to them if they want to risk further expense trying to recover the money.  Any assumption that litigation is a guarantee of recovering the funds is unrealistic.   

MalMonroe

Is your cousin definitely not going to repay the loan? They must feel pretty bad about this. Have your parents tried to speak with them?

I don't think any of the solutions are going to work. 

Going to court - IS possible but the fee for sums of over £10k cost 5% of the claim - in this case £600.

https://www.gov.uk/make-court-claim-for-money/court-fees

As others have said, if your cousin doesn't have the money to repay, taking them to court won't really do much good.

If you go to see a solicitor but your cousin doesn't have the money, what solution can possibly be brought?

Sadly it seems that your family relationships have been, or will be, irreparably damaged whatever happens. 

penners324

Why go to a solicitor?

You can use Money Claim Online

sourcrates

You don`t need a solicitor, total waste of money, obtaining a county court judgement only allows you to take steps to collect this money from the debtor, as they don`t seem willing to make their own arrangements.

Your options would be -

(1) Apply for a charging order on any property they may own - this is one for the long haul and only if all else fails.

(2) Instruct bailiffs to attend there home, you have the option of escalation to high court enforcement if required.

(3) You can have them hauled in front of a judge to explain why they won`t/can`t pay.

(4) Attachment of earnings, if they work.

(5) 3rd party debt order, If you believe the debtor has the monies in their bank account and is deliberately withholding them, you can apply to the courts for a third party debt order.

(6) Threaten bankruptcy - Where the debt is over £5000, you can utilise insolvency proceedings against an individual. 

The pre-requisite to this is the serving of a statutory demand. This document is drafted, prepared and served on the debtor. It gives them 28 days to pay or face bankruptcy/liquidation.

So you have many and varied options, but all come at a price.

lordmountararat

Only lend to friends and family if you can afford to write it off. I have 'lent' money to family members with no expectation of ever being repaid; I just regard these loans as gifts and am glad to have been be able to help.